#数字资产生态回暖 🚨Hidden risks in the market: The chain reaction of Japan's interest rate hikes

Many people haven't realized how Japan's rate hikes will shake the global financial system. Let's break down this logic today.

**Pressure on the US dollar side**

Over the years, Japan has been the world's cheapest source of funds. The strategy is simple—borrow yen, exchange for dollars, buy US bonds and US stocks, then reallocate into crypto assets. This is the core of yen arbitrage trading. Once Japan raises interest rates, a chain reaction occurs:

Rising cost of borrowing yen → squeezed arbitrage profit margins; funds start to close positions → large arbitrage positions are liquidated; yen flows back → Japanese capital demand for USD assets declines.

The result is a relative weakening of the dollar, with the US dollar index under pressure. But don't rush to short the Fed; interest rates are still higher than Japan's. Large-scale sell-offs won't happen immediately—these are medium-term bearish signals.

**Global liquidity contraction**

What does Japan's rate hike mean? Global liquidity will tighten. Arbitrage funds will retreat, market sentiment will become cautious, and volatility in risk assets will amplify directly. Altcoins and high-valuation projects will be hit first; those coins built purely on FOMO are the most dangerous.

**Retail investor advice**

Avoid high leverage, and stay away from those sentiment-driven altcoins. When the market shifts to risk aversion, these assets will fall the hardest.

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