Today's big dump, to put it bluntly, was caused by Japan dropping a "deep water bomb," which sent the global liquidity pool into turmoil.

The Japanese bond market suddenly became unsettled.

Recently, the yield on Japanese government bonds has surged like it's been injected with chicken blood:

The 10-year yield soared to around 1.84%, the highest level since the 2008 financial crisis; the 20-year yield was even more aggressive, reaching around 2.88%, setting a historical peak since the end of the last century.

The market now basically believes: On December 19, the Bank of Japan is likely to raise interest rates. What does this mean? Those global funds that rely on "shearing the yen" to make a living suddenly realize – the cost of borrowing is going to rise.

In the past decade or so, how much money globally has been turned over using this set of strategies? Borrowing ultra-low interest yen, flipping it to buy US stocks, cryptocurrencies, emerging markets... just throw it wherever the returns are high. Now the costs have risen, and the rules of the game have changed:

Start a crazy buyback of yen to pay off debts; sell off overseas assets, especially those high-volatility risk varieties.

So you can see such a chain reaction:

Bitcoin was liquidated for about $785 million within a few hours, directly crashing the spot market; global stock markets are collectively sluggish; silver reached a historic high, and gold continues to hold strong, typical "safe-haven mode" is fully activated.

Why does the whole world shiver when Japan moves?

The core is just two points:

Yen carry trade is the "lifeline" of global capital.

Long-term near-zero interest rates and even negative rates have made the yen the cheapest money to borrow globally. Once interest rates rise, the entire arbitrage chain will not be able to balance, and closing positions will be an inevitable choice.

Japan is a super holder of US Treasury bonds.

As one of the largest overseas holders of US Treasury bonds, when the domestic bond yields in Japan become more attractive, the appeal of overseas assets (including US Treasuries) naturally weakens. Funds flow back to Japan, and global liquidity tightens.

In the end, the essence of this market fluctuation is the global capital re-evaluating the "cost of borrowing yen." Once this cost rises, those players accustomed to low-cost leverage will have to face the pressure of liquidation.