The Bank of Japan is about to implement an interest rate hike decision on December 19th, and this time it carries some weight — the first rate hike in 30 years, with a margin of 25 basis points, raising the benchmark interest rate to 0.75%. It may not sound like a major event, but its impact on the crypto market should not be underestimated.

In recent years, the low-interest environment of the Japanese yen has been a "paradise for arbitrage" in the capital markets. Many investors borrowed cheap yen to speculate on Bitcoin, altcoins, and even stocks. Under this model, as long as the market rises, leveraging with yen is a guaranteed profit. But once interest rates rise, this "free ride" channel is closed.

What will happen after the rate hike? Most likely: institutions and whale-level players holding yen-denominated borrowing positions will be forced to liquidate, arbitrage trades will disintegrate, and funds will rush back to Japan like tenants seeing a nail in the wall. Bitcoin and other risk assets will become objects of quick sell-offs.

The current situation is like standing on the eve of a storm. If the Bank of Japan Governor Ueda Haruhiko signals a hawkish stance, hinting at further rate hikes, the market could undergo a sharp adjustment. Can Bitcoin hold the $80,000 level? Will altcoins collectively weaken? The answers to these questions may be revealed on December 19th.

Of course, if the central bank adopts a relatively dovish attitude and signals a pause or easing, the market reaction might be more stable. But the real risk at hand is clear: the start of a yen rate hike cycle, global liquidity facing re-pricing, and increased volatility in the crypto market.

It is advised to stay vigilant. Protect your spot holdings and keep enough cash on hand for emergencies. Monitoring the market these days can be tiring, so mental preparation is essential.