This morning's big dump seems sudden on the surface, but the root cause is over at the Bank of Japan.

After they released signals of interest rate hikes, they directly smashed U.S. stock futures into pieces, and the crypto market, as an amplifier of risk assets, naturally could not escape either.

The core logic can be summed up in three words: arbitrage exploded. In the past, everyone was frantically borrowing yen (because the interest rates were at rock bottom) and then pouring it into various high-yield assets - stocks, bonds, and of course, cryptocurrencies. Now Japan is going to raise interest rates? Then the cost will soar directly, and these leveraged positions must be liquidated to stem the losses.

When the wave of liquidations begins, liquidity is instantly drained, and the market collapses like a domino effect, from the yen to U.S. stocks and then to the crypto space, all the way down. This is the cruel reality of global capital interconnection.