The Bank of Japan is about to raise interest rates, and the crypto market is entering a critical window.
On December 19, the Bank of Japan will hold a monetary policy meeting, and the probability of a rate hike has been priced by the market at over 80%, with the mainstream expectation being an increase of 25 basis points. The real impact is not in the rate itself, but in the direction of yen arbitrage funds.
Under a long-term low interest rate environment, the yen has been heavily borrowed and flowed into U.S. stocks and the crypto market. Once the rate hike is implemented, deleveraging and capital return often occur simultaneously, putting short-term pressure on risk assets. The difference this time is that the market has already digested this in advance, and the overall leverage level is significantly lower than at its peak, while the Federal Reserve's mid-term easing expectations also provide some buffer.
