Everyone is watching to see if the Federal Reserve will cut interest rates tonight, but honestly, the real concern should be the developments in Tokyo next week.

Bitcoin has surged from $80,000 to $94,000, driven by expectations of rate cuts. The problem is, this expectation has already been mostly priced into the market. What’s more dangerous now is brewing — the Bank of Japan may be saying goodbye to negative interest rates. This sounds distant, but in reality, it could trigger a wave far bigger than the Fed’s rate cut.

**Markets heal their wounds and forget the pain**

I wonder how many remember the Asian Financial Crisis of 1998. At that time, as soon as Japan ended its zero-interest-rate policy, the entire Asian funding chain broke down. Thailand and Indonesia collapsed outright, South Korea nearly went bankrupt.

Back then, the Fed also cut rates, but it was useless. By October, the yen started to skyrocket, yet the US tech sector was still hammered. Eventually, the Fed had to cut rates by 75 basis points in an emergency to stabilize the situation.

The current situation is somewhat similar. Global funds are still playing the yen carry trade; once the yen's interest rate turns, everyone’s positions will need to be re-evaluated.

**Why is yen rate hikes more deadly than the Fed’s rate cuts?**

The core logic is actually simple. The whole world’s money is revolving around the game of "borrowing yen, buying U.S. bonds."

The specific operation is this: investors borrow yen almost at zero cost, convert it into dollars to buy US Treasuries or other high-yield assets, and profit from the interest rate differential. This strategy is based on one premise — that Japanese interest rates stay near zero.