The sudden move by the Bank of Japan caught the crypto market off guard. On December 19, the Bank of Japan decided to end the era of negative interest rates, raising the rate to 0.1%—the first time since the 2008 financial crisis. Following the announcement, global financial markets reacted immediately, with crypto assets becoming the primary victims.

Within a few hours that morning, Bitcoin briefly dropped to the $90,000 level, and Ethereum broke below $3,200, causing panic selling across the entire market. According to statistics, over 150,000 traders were forcibly liquidated, and the chain reaction of leveraged liquidations quickly spread across every trading pair. This rapid decline caught many off guard.

However, the root of the problem does not lie with the Bank of Japan itself, but with the underlying capital flow logic behind it. Over the past few years, the yen has served as the world's cheapest financing tool. Persistent negative interest rates and low-rate policies allowed capital to borrow yen at extremely low costs and then invest in high-yield assets such as US stocks, gold, and cryptocurrencies. This scale of yen arbitrage trading was enormous, and the crypto market was one of the main recipients of this cheap liquidity.

The rate hike changed everything. Rising interest rates meant that this borrowing arbitrage was no longer profitable. Large amounts of capital began to flow back into the Japanese market to unwind positions, causing high-risk assets to face liquidity drain. As the riskiest asset class, the crypto market was naturally the first to be sold off—this was not just emotional volatility, but an inevitable response to the economic cycle.

For investors, this moment warrants deep reflection. First, honestly control your positions, especially avoid high leverage, as market volatility can often be more intense than expected; second, continuously monitor USD/JPY exchange rates and international interest rate trends, as these macro factors directly influence capital flows; third, consider focusing on high-quality assets that are resilient to economic cycles, rather than blindly bottom-fishing low-priced coins.

The storm has indeed arrived, but real opportunities often belong to those who are prepared.