Did you sleep well last night? Anyway, it seems that 210,000 people in the crypto world didn't blink an eye all night — 639 million dollars just vanished.

The reason is simple: Bank of Japan Governor Kazuo Ueda held a meeting, and the market immediately reacted explosively. The probability of a rate hike in December soared to 64%, which is the rhythm of ending a decade of accommodative policy. So what happened?

🔻 The Nikkei 225 plummeted by over a thousand points during the session, directly demonstrating what is called "free fall".
🔻 Japan's 2-year government bond yield breaks 1%, a figure not seen since the 2008 financial crisis.
🔻 The 10-year government bond yield is even harsher, soaring directly to 1.85%, reaching a 16-year high.

The stock market and bond market both collapsed, a textbook-level "double kill" scene.

The crypto world certainly hasn't been spared either. Bitcoin's 5% drop has breached the $86,000 defense line, while Ethereum also plummeted by 5%. Other major coins fared even worse, with many experiencing declines of over 7%. The liquidation data is painful to look at—over 210,000 people worldwide had their accounts wiped out overnight.

The logic behind this matter is actually very clear: Japan is going to raise interest rates → Yen arbitrage trading starts to close positions → Global liquidity contracts → High-risk assets are sold off. The three gears are interlocked, and no one can escape.

What's even more bizarre is that the yen exchange rate has only risen to 155.55, a meager increase. The market is beginning to doubt whether this interest rate hike is truly for the economy or if it's a "political maneuver" forced by the government's stimulus plan being criticized and officials making reckless statements.

If you look back at history, you will know that every time Japan's macro policy shifts, the global market has to tremble along. Will this time be an exception? Anyway, the 210,000 people who got liquidated have already given the answer with real money.

💡 What should we do now?

To be honest, don't pay attention to those "bottom-fishing opportunities" calls anymore. The three most stable operations at this stage are:

First, reduce your positions. Cut high-risk assets without hesitation; don't feel sorry.
Second, keep cash; in extreme market conditions, liquidity is a thousand times more important than returns.
Third, stay away from leverage; in a situation of long and short killing each other, leverage is a death sentence.

If you really have to configure something, gold and U.S. treasuries as safe-haven assets might be much more reliable than betting on a rebound in coin prices.

This storm has just begun, and the $639 million liquidation may just be an appetizer. With Japan's interest rate hike and the global tightening cycle, every subsequent move must be cautious—after all, dancing on the edge of a knife, one misstep could lead to a bottomless abyss.