After discussing the U.S. stock market yesterday, today a bunch of people are panicking: Japan is going to raise interest rates! Arbitrage funds are going to escape! A financial crisis is coming!
Sounds like it’s really true...
But when I saw the news, I couldn't help but laugh—Japan's central bank said it will slowly sell ETFs over 112 years, selling just 5.2 billion dollars a year. With such a small amount, can it really overwhelm the global market? Do you believe it?
In recent years, Japan has slowly increased its negative interest rate to 0.5%, and it may rise to 0.75% on the 19th.
Sounds pretty fierce? But think about why it had 16 years of zero interest rates—because the public would rather save money than spend it, deflation lasted too long, and the economy is almost 'Buddhist' now.
So this rate hike is more like a 'tentative rise,' not a 'full-speed sprint.'
Why is there fundamentally no need to be afraid? Three hard logic points.
The interest rate differential is still there, and the arbitrage space remains large.
Even if Japan raises to 0.75%, U.S. interest rates are still above 3.75%. There is a 3% gap! Even accounting for some costs, the arbitrage space of 2.5%+ means large funds will pull out? Don't forget, stablecoin yields can now reach 5%-6%.If it were you, would you run?If you were going to run, you should have done it early. Are you still waiting for the fourth rate hike?
This is already Japan's fourth interest rate hike this year. If you were truly afraid of risk, you would have run when the first hike (from negative interest rates to 0) happened. Those who can stay until now are all 'experienced funds' that can withstand volatility.The global market is not lacking in this little bit of money.
Some estimate that Japan's arbitrage funds total around 2 trillion USD. Sounds like a lot? But a single giant company in the U.S. has a market value exceeding 2 trillion... This amount of liquidity barely causes a ripple in the global ocean.
Data speaks: After the rate hike, did U.S. stocks and cryptocurrencies fall or not?
Looking back at Japan's first three rate hikes:
March 2024: First rate hike, Nasdaq rises for two consecutive days; BTC falls on the same day but rebounds the next day.
July 2024: Second rate hike, Nasdaq drops for one day and then directly rebounds; BTC follows U.S. stocks and then starts a wave of market activity.
January 2025: Third rate hike, U.S. stocks fluctuate, BTC actually rises on the same day, and the subsequent drop is mainly due to the rhythm of Trump's tariff war.
So you see, the rate hike itself didn't crash the market; market sentiment often adds drama by itself.
@usddio's reminder: When emotions run too fast, being steady is the winner.
Every time the market is startled, it's because emotions have run ahead of facts.
But to truly invest, you need to learn to look at data, compare logic, and focus on the long term.
Just like @usddio has always emphasized: maintain stability amidst volatility and hold onto confidence amidst noise.
No matter whether Japan raises interest rates or the U.S. provides liquidity, finding that anchor that can traverse cycles is key.
And @usddio emphasizes sufficient reserves and flexible mechanisms in its design; even if short-term arbitrage funds flow in the market, it can maintain price and market confidence stability through algorithms and reserves. Don't fear the storm; fear panicking first.
Don't use the actions of the fifth-largest economy to scare the largest market.
There are news reports every day in the market, but not every piece of news is worth following for trading.
Research more data, push more logic, and gradually form your own judgment system—this is the best way to counter noise.
Remember: Only by being stable can you go far.
