Brothers who play with coins have been confused: Why does the Japanese central bank's announcement of an interest rate hike cause the crypto circle to face hardships?

To put it simply, our crypto circle has been enjoying a free buffet from them for over a decade, and now they're ready to collect!

For the past ten years, the Japanese central bank has essentially provided a free money machine for the global financial circle: the interest on the yen is so low it's almost free, even negative, and global institutions and hedge funds have rushed to borrow yen, only to throw the money into the crypto circle and U.S. stocks where big profits can be made. Borrowing yen without paying interest to earn the price difference on high-yield assets is like picking up money without doing anything.

Now that the Bank of Japan plans to raise interest rates, it directly cuts off the path for arbitrage: first, borrowing yen becomes more expensive; suddenly, free money comes with a price; secondly, after the rate hike, the yen will appreciate, and when it comes time to pay back, the exchange rate difference will force you to shell out a large sum, effectively erasing the profits from arbitrage, and you might even lose money.

The institutions relying on borrowing yen to profit are not foolish; they quickly realize it's not worth it and immediately stop, hastily selling off their crypto holdings to convert to dollars, then back to yen to repay their debts. The money in the crypto circle is thus forcibly extracted, leaving it as if they were stripped of their assets, and the market collapses!

To put it bluntly, those who previously enjoyed free money are now withdrawing their investments to pay off debts. With the flow of capital in the crypto circle drying up, they naturally suffer.

The impact of Japan's interest rate hike is still slowly fermenting, and funds in the crypto circle are quietly flowing out. If you are lost and wandering around, hurry to follow me, 👉大毛的淘金基地 is sharing practical tutorials and trading strategies; the strategies continue, and those who want to make money should follow along quickly! #美国非农数据超预期 #美联储降息