#中本聪 Why did Japan's interest rate hike cause panic in the crypto market? Understand the impact before taking action!
Recently, the volatility in the crypto market has been significant, and Japan's interest rate hike is definitely a key driver! Some may not understand the relationship between Japan's interest rate hike and the crypto market. The core issue is "yen carry trade"—previously, Japan's interest rates were almost zero, and many institutions borrowed cheap yen to buy high-yield assets like Bitcoin to profit from the price difference.
Now that Japan is raising interest rates, the cost of borrowing has increased, and the yen will become more valuable. These institutions can only rush to sell their cryptocurrencies to close positions and recoup funds to repay loans. This has led to Bitcoin plummeting over 8% in early December, with a 24-hour liquidation amount reaching $637 million, causing many high-leverage players to be liquidated.
However, everyone shouldn't panic and sell at a loss! In the short term, the withdrawal of funds will lead to greater volatility in the crypto market, but in the medium to long term, there are two key points: first, Bitcoin's "hedging properties" will become prominent; the more uncertain the macro environment, the more funds will seek safety; second, after the appreciation of the yen, the cost for domestic Japanese investors to buy cryptocurrencies will decrease, and with the local government's friendly policies towards Web3, new funds may come in.
Next, keep a close eye on the results of the Bank of Japan's meeting on December 19, as the rate hike magnitude and pace are crucial. It is advisable for everyone to avoid high leverage, and those holding positions should not blindly follow the trend to sell. For those who are out of the market, don't rush to bottom fish; it’s safer to act once the market stabilizes.~#加密市场观察 $币安人生
