To put it simply, what Japan is doing is pulling cryptocurrencies out of the "gray area" and bringing them into the sunlight, giving them the same treatment as stocks and bonds. For the entire market, this is like a shot of adrenaline.

Let’s start with the most practical part—taxes. Previously, if you made money trading crypto in Japan, the government could take more than half of your profits (up to 55%). Who can stand that? Now they're planning to switch to a flat 20% tax rate, which means you get to keep a lot more. With thicker wallets, naturally, more people will be willing to join in.

Now, let’s talk about regulation. The new department will be watching for insider trading (same standards as traditional financial markets), and project teams and exchanges will have to open up their books for everyone to see. Sure, there are more rules, but the upside is that the game is now transparent. What do big investors fear most? Not knowing when they might step on a landmine. Now that the boundaries are clear, institutional money will actually dare to invest.

The even more crucial point is the change in attitude. Japanese officials have openly stated that digital assets can be part of a legitimate investment portfolio. That’s basically a government endorsement—no longer treating crypto as just some speculative gamble. With institutional players entering, the market’s ceiling just got a lot higher.

That said, being bullish long-term is one thing, but short-term trends are another. When news like this drops, the market often starts pricing in the expectations early, and when the policy actually takes effect, you might see a “buy the rumor, sell the news” effect. If you’re still holding short positions, you need to keep a close eye on short-term sentiment swings and capital flows—don’t get caught off guard by a sudden rally.