The night before last, the crypto world was still guessing whether the 'bull market would be late,' but this morning it was directly hit by a 'rate hike hammer' from the Bank of Japan, leaving everyone stunned—Bitcoin dropped below $85,000, and Ethereum fell below the $3,000 mark, with 110,000 brothers liquidated in 24 hours, evaporating 2.9 billion in wealth! What's even more heartbreaking is that this wave of bloodletting may just be the beginning; don't rush to buy the dip, let me, an old hand with 8 years of experience, clarify the underlying logic for you.
Many newcomers panic when they see the market plummet, thinking that market confidence has collapsed, but that's not the case—the core issue lies in 'liquidity being choked,' and the culprit is Japan's unprecedented tightening operation after thirty years. Some may not understand, so let me explain it in simple terms: for the past decade or so, the Bank of Japan has maintained 'zero interest rates or even negative interest rates,' which is essentially giving money away for free to institutions. These institutions took nearly free yen and rushed into the crypto world to trade and earn interest differentials, which is what we commonly refer to as 'yen arbitrage funds,' and it is also one of the important forces supporting liquidity in the crypto market.
But this week the Bank of Japan held a meeting, and the direction has completely changed— the probability of raising interest rates to 0.75% soared to 98%. What does this mean? It means that institutions will have to spend more money to borrow yen; borrowing costs have skyrocketed. Previously it was "using free funds to trade cryptocurrencies," now it’s "borrowing money to trade cryptocurrencies could lead to losing principal." Anyone would quickly sell off their cryptocurrency assets to convert back to yen to repay debts. As Bitcoin serves as the "barometer" of the cryptocurrency market, it was naturally the first to be sold off. This wave of decline is not because of issues with the projects themselves, but purely because "funds are being forced to exit," which is a typical liquidity crisis.
To be honest, this wave of crash had long been foreshadowed, and Japan's interest rate hike was just the last straw that broke the camel's back. I had already reminded everyone in the community that there are three major "invisible risks" in the recent market: First, the expectations for the Federal Reserve to cut interest rates have cooled. Powell's recent statements have been ambiguous, which means "the rate cuts won’t happen that soon," and the expectations for global liquidity easing are gone; Second, institutional attitudes have shifted. Standard Chartered has directly lowered Bitcoin's target price, indicating that Wall Street's confidence in crypto assets is weakening; Third, the purchasing power of whales has peaked. In recent months, there have been few signs of whales massively increasing their holdings, and the market has lost its "ballast." Once there is any disturbance, panic is likely to ensue.
Some brothers might ask: "Can we bottom fish now?" My answer is: Don't rush! Entering the market now is no different from "trying to grab chestnuts from the fire." The card of Japan's interest rate hike has already been clearly played, and more arbitrage funds will leave the market subsequently; the panic sentiment in the market has not fully released yet. Remember this: in a bear market, "surviving" is more important than "making quick money." The safest operation now is to "hold your hands, and manage your spot carefully," avoid high leverage, and do not be tempted by the so-called "bottom-fishing opportunities." Wait until you see the panic sentiment hitting the bottom, and the bloody chips have been digested enough before considering entering the market.
As for the $ASTER that everyone is concerned about, is it a crisis or an opportunity in this market? My view is: opportunities often hide within crises, but the premise is that you must be able to endure. The current market is murky, and both quality projects and worthless tokens will be hammered, but when liquidity recovers, truly valuable projects will rebound first. I will continue to track the capital flow and technical trends of $ASTER and will share my latest judgments in the community.
Lastly, let me say something from the heart: The cryptocurrency market has never lacked opportunities, but it lacks "people who remain calm in a crisis." Although this wave of bloodshed is cruel, it also eliminates those who blindly follow trends and cannot withstand risks. Follow me@Square-Creator-e677125ff2da0 , don't get lost!
