modmay

Japan's interest rate hike poses risks to virtual currencies primarily in three areas: tightening liquidity, unwinding yen arbitrage trades, and rising risk aversion. The specific impacts are as follows:

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1. Unwinding yen arbitrage trades directly withdraws funds from the crypto market.
Japan has long maintained low interest rates, allowing investors to borrow low-cost yen and invest in high-yield assets (such as U.S. stocks and cryptocurrencies). Once interest rates are raised, the yen appreciates, borrowing costs increase, and arbitrage trades must be unwound, causing funds to flow back to Japan and leading to a sell-off of global risk assets, with cryptocurrencies suffering the most due to their high volatility.

- After the interest rate hike in July 2024, Bitcoin plummeted from $65,000 to $50,000, a decrease of 26%, with the total market value of cryptocurrencies evaporating by $600 billion.
- The current global yen arbitrage trading volume exceeds $1 trillion, with some funds directly flowing into the crypto market.

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2. Tightening liquidity equates to "reverse quantitative easing."
An interest rate hike indicates tightening global liquidity, especially under the backdrop of Japan being the "last bastion of zero interest rates" shifting towards tightening. This leads to rising global funding costs, reduced risk appetite, and a reassessment of valuations for high-risk assets such as cryptocurrencies.

- Bitcoin is viewed by some investors as the "child of liquidity bubbles," and once liquidity recedes, prices can easily experience sharp corrections.
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3. Yen appreciation triggers a chain reaction, exacerbating market volatility.
An interest rate hike in Japan is usually accompanied by yen appreciation, and a drop in the USD/JPY exchange rate will trigger a repricing of global risk assets, with cryptocurrencies, being high-risk assets, experiencing much greater fluctuations than traditional markets.

- Data shows that for every 5-point drop in USD/JPY, Bitcoin averages a correction of 8%-12%.
- If USD/JPY falls below 130, it could trigger the largest scale of arbitrage trade unwinding in history, pushing cryptocurrencies into a bear market.

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4. Deteriorating market sentiment and increased leverage liquidations exacerbate declines.
After the interest rate hike expectations materialize, market panic escalates, the VIX index surges, and leveraged funds in the crypto market are forcibly liquidated, creating a vicious cycle of "decline-liquidation-redecline."

- In December 2025, the crypto market saw evaporations of about $300 million due to interest rate hike expectations, with 87% being liquidations of long positions.
- Bitcoin's beta coefficient is as high as 2.2, meaning that for every 1% drop in U.S. stocks, Bitcoin averages a 2.2% drop.
Above are personal opinions #BTC #ETH

Is there insider information on $币安人生 ?

$币安人生 is not a bro, is the fluctuation really that big?

What was I saying? It turns out it’s a reward 🌚 But 0.1u is too little, right? Not to mention, I’d say to close all positions recommended with the interest rate hike in Japan on the 19th #加密市场观察
$BTC $ETH $

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It seems that after finishing, you can't receive the message that it has ended @Yi He @Binance Square Official

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