This week's market experienced intense turbulence. Bitcoin dropped below $85,000, Ethereum lost the $3,000 mark, over 110,000 traders were liquidated within 24 hours, and $2.9 billion in funds evaporated instantly. Behind this decline, the Bank of Japan's interest rate hike decision became the final straw that broke the camel's back.

The key risk point lies here — the probability of the Bank of Japan raising interest rates to 0.75% has risen to 98% this week. This may seem like just a numerical change, but in reality, it signals an impending rare three-decade tightening of liquidity. Over the past ten years, global institutional investors have been applying a simple and brutal arbitrage pattern: borrowing near-zero interest yen, converting to dollars, and then aggressively purchasing high-risk assets like Bitcoin. Earning a spread passively attracted enormous capital inflows.

But the rules of the game suddenly changed. Once the expectation of Japan’s rate hike is confirmed, the cost of these arbitrage positions skyrockets, and continuing to hold them will incur losses. The result is a collective rush to exit — investors frantically sell assets and convert back to yen to pay off debts. Bitcoin bears the brunt, becoming a large-scale withdrawal target.

In fact, this plunge was foreshadowed early on. The Federal Reserve’s stance on interest rate cuts has become increasingly ambiguous, and the liquidity boom in the market has prematurely ended. Meanwhile, Standard Chartered Bank suddenly downgraded Bitcoin’s target price significantly, signaling that whale investors' enthusiasm may have peaked. Geopolitical risks are also fueling the sell-off — the Russia-Ukraine situation remains uncertain, and risk aversion sentiment is spreading across the market.

Multiple pressures piling up, this shock is only the beginning. The real test will come in the next few days, when Japan’s rate hike "trump card" is officially played, and the market's direction will become clear. Many are eager to buy the dip, hoping to catch this "flying knife," but fail to realize they might be caught with a scythe instead.

The most rational approach right now is four words: Control your hands. Spot market rules. Don’t expect to reverse in such extreme conditions; instead, wait for panic to truly release, wait for forced liquidations to settle. The market never lacks opportunities, but survival is the key to smiling last. Ethereum’s ecosystem upgrades and the movements of some emerging projects are worth paying attention to, but only after you survive. Stay calm, and you’ll be able to wait for the real rebound.