$BTC $ETH $BNB

The Bank of Japan's interest rate hike is imminent, and market expectations have been highly locked in—this could very well become the last straw that breaks the short-term cryptocurrency market. The logic is clear, and there is no mercy.

▌Arbitrage funds are urgently withdrawing

Nearly 20 trillion yen of arbitrage positions have long relied on zero-cost yen to leverage cryptocurrency assets. Once borrowing costs surge, both institutions and retail investors will be forced to sell positions in Bitcoin, Ethereum, and others to repay debts. History is a lesson: in the month of the first interest rate hike in 2024, BTC dropped by 12%, and this round of pressure will only be greater.

▌Market liquidity faces direct extraction

The prosperity of cryptocurrencies is fundamentally supported by cheap liquidity. Japan, as the last major central bank to shift towards tightening, signifies the depletion of incremental funds. At the beginning of December, merely due to rising rate hike expectations, BTC's daily drop exceeded 5%, ETH fell by 7%, and nearly 270,000 people across the network were liquidated—this is merely a rehearsal.

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▌Highly leveraged altcoins on the brink of collapse

Many altcoins have weak liquidity and high leverage, making them prone to experiencing "double drops" during systemic sell-offs. In previous similar market conditions, privacy coins saw daily drops exceeding 20%; if the liquidity crisis spreads, some projects may go to zero.

In summary, in the face of highly certain tightening signals, do not easily believe the story of "long-term hedging." Before the news lands, no cryptocurrency can escape the impact—caution is the most prudent strategy at present.