Japan suddenly raises interest rates, triggering huge waves in the global leveraged market! The arbitrage feast that has lasted for twenty years is about to be forcefully ended.
At the end of November 2025, the Bank of Japan dropped a bombshell on the global market with the statement, "considering a rate hike in December." Within just a few days, the Nikkei index plummeted over 1000 points in a single day, the yen strengthened significantly, and bond yields soared to new highs not seen since 2008—global markets were instantly thrown into severe turmoil.
This is not just an ordinary market adjustment, but a precise disassembly of the "yen arbitrage trade." Over the past twenty years, countless investors have borrowed yen at nearly zero cost, exchanged them for dollars, and poured into various high-yield assets such as U.S. Treasuries, U.S. stocks, and emerging market assets. The interest rate spread combined with leverage magnified returns, while risks accumulated to the extreme.
Behind the data, a chain of liquidations is erupting comprehensively:
- The Nikkei index quickly fell about 6% from its recent peak;
- Crypto assets saw a significant drop of 8% in a single day, with related leveraged positions in Asia facing consecutive liquidations;
- The market estimates that the scale of funds related to yen arbitrage could reach hundreds of billions of dollars, and once the trend reverses, half of the value could evaporate instantly.
When Japan slightly raised interest rates last July, nearly $200 billion in arbitrage positions were forcefully closed. This time, the Bank of Japan is obviously serious—inflation has exceeded standards for 41 consecutive months, and synchronized increases in wages and prices provide real support for this rate hike.
The era of cheap global funds is accelerating its end. The tightening of yen liquidity means that Japanese institutions will shrink their overseas investment scale, leading to a decrease in demand for U.S. Treasuries, which may further push up global interest rates. Emerging markets that rely on hot money inflows are about to face the impact of capital withdrawal.
For China, the turmoil in external markets is both a test and an opportunity. As long as it maintains exchange rate stability and prevents asset bubbles, RMB assets are expected to become a safe haven for global funds. However, for ordinary people, the reality is particularly clear: the old path of seeking high returns through borrowing cheap funds is no longer viable. #加密市场观察 #ETH走势分析 $ETH
