Warning of a market crash within 48 hours: The Bank of Japan (#BoJ) is moving to raise interest rates again, threatening to burst the Japanese debt bubble and collapse global carry trade, which could drastically drain liquidity from stocks and cryptocurrencies.
Japan has been the "anchor" of the world for 30 years, lowering interest rates across the entire planet. Today, that anchor has broken.
Why are the next 48 hours crucial? Let me simplify it:
The "carry trade" game is over: For years, investors used to borrow Japanese yen at near-zero interest and use that money to buy Bitcoin, US stocks, and gold. Now, when Japan raises interest rates, the cost of this loan will increase, and the yen will strengthen. Here, the investor is forced to "sell" what he bought (Bitcoin and stocks) in order to repay his loan in yen. This is what we call "forced liquidation".
Japan is the "central bank" of the world. Japan holds trillions of dollars in US bonds and global stocks. If they have an internal headache due to debt (10 trillion dollars!), they will be forced to withdraw their investments from abroad and bring them back to Japan, meaning they will withdraw liquidity from global markets.
The deadly equation: Japan is caught between two fires: the fire of inflation (which is making them raise interest rates) and the fire of debt (which will explode if interest rates rise).
🔴🧐The gist:
Japan is the pillar that supported the roof of the global market all these years. We were taking money from them "for free" to speculate with. Now Japan said, "I want my money back with interest." When everyone starts sending money back to Japan, we will see the markets bleeding because "liquidity" has flown away.
My advice ⚠️⚠️:
The next 48 hours are a time for "observation," not a time for adventure.
Digital currencies: They are the first thing to "take a hit" when liquidity decreases, so be very careful with leverage.
The golden rule: When the elephant (Japan) knocks down the whole forest, it shakes and doesn't stop.
Bush shook.
