$UNI
The yen interest rate hike storm strikes! 180,000 people liquidated in the cryptocurrency market within 24 hours, who is harvesting the leeks?
The policy decision in Tokyo's early morning has become a harvesting signal for the global cryptocurrency circle! The Bank of Japan suddenly announced an interest rate hike of 25 basis points to 0.75%, the highest rate in 30 years. Bitcoin plummeted to below $86,000, with over $600 million liquidated across the network within 24 hours, leaving 180,000 investors in dire straits. This seemingly distant monetary policy adjustment is stirring up a bloodbath in the cryptocurrency market through the chain of yen carry trades.
The logic behind this has long been predetermined: for decades, the yen has become the world's cheapest financing currency due to its nearly zero interest rate. From Mrs. Watanabe to Wall Street hedge funds, everyone has been leveraging the yen to enter the cryptocurrency market for arbitrage, with the trading volume of Bitcoin denominated in yen peaking at 35%. Now, the interest rate hike has caused financing costs to soar 12 times, completely collapsing this no-cost, high-profit scheme, forcing institutions to frantically sell off crypto assets to cover their yen short positions, creating a death spiral of decline - liquidation - further decline.
History has long given a warning: during the past three interest rate hikes by the Bank of Japan, Bitcoin experienced deep corrections of 20-30%. On-chain data further reveals clues, with Bitcoin outflows from Japanese exchanges surging 217% in the 48 hours before the interest rate hike, as market makers positioned themselves in advance for harvesting. For ordinary investors, the impact of the yen interest rate hike goes beyond the plummeting coin prices; the withdrawal of arbitrage funds leads to market liquidity drying up, with volatility soaring to 2.3 times that of dollar trading pairs, making bottom-fishers instant prey for quantitative algorithms.
Currently, the Bank of Japan has hinted that it may continue to raise interest rates, and the pressure from carry trade liquidations is still fermenting. Is this storm a short-term correction or the beginning of a bear market? Have you avoided leverage risks in advance?
