This Friday is unusual. The "Triple Witching" day is coming, a moment that occurs only four times a year when options and futures contracts expire simultaneously. This is accompanied by a surge in trading volume and volatility, making it difficult for the market to stay calm.

What's more troublesome is that all of this coincides with a sensitive timing— the Bank of Japan's interest rate decision announcement. The market has already priced in some expectations of rate hikes, leading to a significant decline, and the Nikkei index also experienced a sharp drop overnight. Many are quietly watching the same question: Will yen carry trade positions be forced to close, triggering a chain reaction similar to July and August 2024?

Why is this so critical? Because for a long time, Japan's ultra-low interest rate environment has made the yen the world's cheapest borrowing currency. Large amounts of funds borrow in yen, convert to USD, and invest in US stocks, tech stocks, or high-volatility assets like Bitcoin—this is the core logic of yen carry trades. The game can only continue if one condition is met: the yen continues to depreciate.

Once the yen appreciates, borrowing costs rise, and seemingly profitable leveraged positions become burdens. When forced to close positions, the sell-off usually involves not just the yen itself but also risk assets held in portfolios. Stocks and cryptocurrencies are among them.

Currently, two forces are converging: on the technical side, the volatility shock from Triple Witching; on the fundamental side, the potential pressure on global risk assets from the Bank of Japan's policy shift. In the short term, certainty is low, and the market could fluctuate rapidly. Managing positions carefully and practicing good risk management are essential in the coming days.