Recently, the hottest topic of discussion in the market is the possibility of the Bank of Japan starting a rate hike cycle. If this becomes true, the global financial market is likely to face a significant shock—both the stock market and the crypto world may have to enter a cooling mode.

Why do you say that? To put it simply, it involves three chain reactions:

**The source of funds must be cut off**
In the past decade, Japan's near-zero interest rate environment allowed global investors to borrow yen at low costs to speculate on various assets. This "borrowing yen to invest globally" strategy has supported countless hot money flows. However, once Japan raises interest rates, these arbitrage funds must return to their home country, effectively cutting off the supply chain of cheap capital in the market.

**Carry trade is about to collapse**
U.S. stocks rise, cryptocurrencies are bullish, and emerging markets are hot—many asset prices are actually buoyed by carry trade funds. When the yen interest rate rises, these "borrow low interest, invest in high returns" operations cannot continue, and risk assets will naturally be sold off.

**Global liquidity is tightening**
Japan is the second largest bond market in the world after the United States and one of the super investors overseas. If it reduces its capital outflow, the liquidity of the global market will significantly deteriorate, and it will be difficult to keep asset prices elevated.

Ultimately, Japan's interest rate hike is not just its own issue, but a systemic variable that influences the flow of global capital.