Today is the 534th day since I started posting dynamically, and I haven't missed a single day. Each post is not done half-heartedly, but is carefully prepared. [微笑] If you think I am a serious person, you can follow me, and I hope the content can help you every day. The world is big, and I am small, so please follow me to avoid difficulty in finding. [微笑][微笑]

Why does the yen interest rate hike affect the cryptocurrency market?
Because for the past few years, the cheapest money in the world has been in Japan. Many institutions and big players first borrow yen at extremely low interest rates, exchange it for US dollars, and then leverage and trade in Bitcoin, Ethereum, and various altcoins. This operation is called "yen arbitrage trading," with a scale that is frightening, where two to three percent of the funds have flowed into cryptocurrencies. In simple terms: the bull market in the crypto world over the past few years has been supported by Japan's cheap money.

Japan is now raising interest rates, which means borrowing yen has suddenly become more expensive. Money that used to be almost free is now costing more; who would still want to continue playing? The only option is to quickly sell coins for cash and pay back the yen. With trillions of dollars fleeing together, how could the market not collapse? This is nothing new. Last August, when the Bank of Japan unexpectedly raised rates, Bitcoin dropped from 65,000 to 49,000 in one day, and the global market lost 3 trillion dollars. This time, it will probably be even harsher. For ordinary people, this wave of decline feels like a series of knife strikes: liquidity is being drained, and the water in the pool has suddenly decreased. Emotions are collapsing, large investors are fleeing, retail investors are panicking, the media is proclaiming a bear market, and more people are cutting losses, causing the snowball to grow bigger.

Why is this particularly dangerous this time?
The Federal Reserve may cut interest rates, while Japan is raising them, causing a rift in the direction of funds, which is what arbitrage traders fear the most. The overall leverage in the crypto market is higher than last year, and even a slight fluctuation can trigger a wave of liquidations. In mid-December, there will be a large number of options expiring, adding fuel to the fire for a market crash. However, history tells us: after a collapse, there is often a golden pit. Each time there is a sharp drop caused by arbitrage withdrawals, it is usually followed by opportunities for large funds to buy the dip.

What should ordinary people do?
Hold onto Bitcoin and Ethereum, don't panic sell at low points and hand them over to institutions. Focus on the Bank of Japan meeting on December 18-19, and try to reduce leverage beforehand, especially with altcoins. Retail investors should "patiently wait for opportunities and act decisively and steadily."