What impact will Japan's interest rate hike have on the global cryptocurrency market?

The core impact of Japan's interest rate hike on the crypto market is a contraction in short-term liquidity and a strengthening of mid-term rebalancing, with the primary conduit being the unwinding of yen arbitrage trades. BTC/ETH are the most sensitive to fluctuations. Below are the phased impacts and trading key points (as of 2025-12-17).

1. Core Transmission Path

1. Arbitrage trades contraction: The interest rate hike raises the financing cost in yen, coupled with expectations of yen appreciation, forcing the unwinding of arbitrage positions that involve "borrowing yen to buy crypto," prioritizing the sale of highly liquid crypto assets to repay debts.

2. Risk appetite decline: Global liquidity tightens, putting pressure on the valuation of high-risk assets, and cryptocurrencies, being sensitive varieties, are likely to fall first.

3. Strengthening of mid-term hedging properties: Rising macro uncertainty highlights Bitcoin's sovereign risk hedging value, often resulting in "falling first, then stabilizing, then strengthening."

2. Phased Impacts (Combined with Historical Performance)

• Short-term (1-4 weeks after the decision): Three interest rate hikes in 2024-2025, with BTC generally falling by 20%-30%; if this time the rate is raised by 25bp to 0.75%, BTC/ETH may experience a short-term correction, and contract liquidations may amplify volatility, with support levels easily tested. Key scenarios: conforming to an expected hawkish stance → yen strengthens, crypto under pressure; not meeting expectations leaning dovish → risk appetite recovers, slight rebound.

• Mid-term (1-3 months): The wave of arbitrage unwinding subsides, and the market returns to fundamentals; Japanese investors, due to yen appreciation, see a decrease in the cost of allocating dollar-denominated crypto, which may bring in incremental funds.

• Long-term (3-6 months): Impact weakens, returning to the crypto cycle itself (ETF funding, halving expectations, on-chain fundamentals, etc.).

3. Trading and Risk Control Key Points

1. Short-term operations: Light positions (≤30%) 1-2 hours before and after the decision, using stablecoins/short contracts for hedging; BTC focus on support at 42000-42500, resistance at 44000-44500, ETH focus on support at 2870-2900, resistance at 2980-3000, avoid adding positions against the trend if breaking levels.

2. Mid-term strategy: Gradually build positions after corrections, prioritizing allocations in mainstream coins like BTC/ETH, avoiding small-cap high-leverage coins.

3. Risk reminder: Be wary of liquidity shocks leading to cascading declines, strictly control leverage, and set stop-losses below key support levels. #日本加息 $BTC $ETH $SOL