The truth about today's market crash is finally clear.
The rumors online are all smokescreens, claiming that China is cracking down on virtual currency, or that Powell was scared by Trump and wants to run away, which is fundamentally untenable. If it were really news from China, the market would have started to drop over the weekend, and Powell's term is also supposed to end in June next year, so it's impossible for him to back down at this time given his style.
What truly smashed the market was the sudden signal for interest rate hikes from the Bank of Japan.
As soon as the news broke around 7 AM, the dollar plunged against the yen, and the cryptocurrency market almost simultaneously crashed, the timing was perfectly aligned and there was no way to wash it away.
Why is the impact so great?
Because Japan is like the world's largest "liquidity pump," and now it suddenly wants to reverse the flow. Originally, a large amount of yen was circulating overseas, and as soon as Japan tightens its policy, the funds have to flow back domestically. An interest rate hike in Japan is equivalent to pulling liquidity from the global market.
In a market like cryptocurrency, which is highly volatile and heavily reliant on liquidity, it was the first to be washed away.
This is not just a short-term bearish signal, but a real medium to long-term pressure. Funds flowing back to Japan will put pressure on global risk assets, and the cryptocurrency market will inevitably be the first to bear the brunt.
Now the only hope is for the US to pressure Japan to stop tightening its monetary policy, otherwise global assets will suffer as a result.
Remember, a big drop doesn’t happen without reason, and it definitely won't be because of rumors. The only thing that can smash the market like this is the logic of real liquidity.
The market isn't afraid of falling; what it fears is falling without understanding the reason. Now that the reason is clear, the next thing to watch is the game between the US and Japan—this is the most crucial hidden line for December.$BTC
