Brothers, the eye of the storm has formed! Everyone's attention must be focused on the Bank of Japan meeting on December 19. This is not just a matter for the yen; it could become the key trigger for igniting global risk assets, especially in the cryptocurrency market.
Core Bomb: Yen Arbitrage Trading Liquidation
The root of all this lies in the global market's long-standing game of "yen arbitrage trading." Simply put, institutions borrow yen at nearly zero cost, convert it into dollars, and then frantically buy high-risk assets like Bitcoin to profit from the price difference. Once the Bank of Japan tightens the taps and begins to raise interest rates, the rules of the game will completely change:
· Borrowing costs will soar, and arbitrage opportunities will disappear.
· Investors will be forced to liquidate on a large scale: selling Bitcoin and buying back yen to repay debts.
· This chain reaction of selling will hit Bitcoin, as a highly liquid asset, the hardest.
History Does Not Lie: Every Rate Hike is Accompanied by a Crash
Looking back at historical data, every rate hike by the Bank of Japan since 2024 has dealt a heavy blow to Bitcoin, with declines exceeding 20%.
· March 2024: After the rate hike, Bitcoin fell by about 23%.
· July 2024: After the rate hike, Bitcoin fell by about 26%.
· January 2025: After the rate hike, Bitcoin fell by about 31%.
If the rate hike occurs as expected, history is likely to repeat itself. Analysts point out that the price of Bitcoin may quickly retract to the range of $70,000 to $72,500, with even technical analysis suggesting a “bear flag formation” pointing to a lower target of $67,000.
Not Just Japan: Multiple Storms Are Accumulating
Next week, the market will face a series of key events, and volatility may be at its peak:
· U.S. Non-Farm Payroll Report: The data will be released in a consolidated manner, and any surprises could disrupt the market.
· Federal Reserve Dynamics: Official speeches and key data will continue to influence liquidity expectations.
· Technical Alarm: Demand for spot purchases of Bitcoin has sharply declined, and ETF capital inflows have turned into outflows, indicating weakened buyer confidence.
