🧐WHY DID THE MARKET CRASH TODAY?

In my opinion, it is the result of many negative news and contexts.

1) Yen carry trade

Yen carry trade is a popular investment strategy: Investors (such as hedge funds) borrow money in Japanese yen (JPY) at very low interest rates (close to 0% for many years), then convert it to USD or other currencies to invest in higher-yielding assets, such as American stocks, Bitcoin, or other crypto altcoins. They profit from the interest rate differential and the rising asset prices.

What has changed?

Recently, the Bank of Japan (BOJ) has been raising interest rates (or showing signs of an increase), causing Japanese bond yields (such as the 10-year term) to soar to 1.84% – the highest in over 17 years.

This makes borrowing yen more expensive, forcing investors to "unwind" (stop the strategy): They liquidate assets (crypto, stocks) to pay off yen debts, causing panic selling and a sharp drop in prices.

According to @ghost93_x, this is the main reason for the crypto dump on 1/12 (like $BTC down 3 - 5%, $ETH down 5%).

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