The Bank of Japan is scheduled to hold a meeting on December 19, and this decision could be a watershed moment for the global financial markets.

Let's start with the most straightforward point: the yen is not an ordinary currency; it is the world's largest arbitrage tool. What does that mean? Borrow cheap yen, exchange it for dollars to earn a stable interest spread — it's that simple and straightforward.

For the past 30 years, Japan has maintained zero interest rates, and by 2016, it even adopted negative interest rates, continuing until March 2024. Imagine what has happened over these 25 years: you borrow 1 million yen, exchange it for dollars, deposit it in the bank earning 5% interest, then exchange back to yen when repaying. The arbitrage space in between is enormous and astonishing.

So you can understand why people like Warren Buffett and Mrs. Watanabe from Japan are rushing into the market. According to data, this wave of yen arbitrage funds approaches $4 trillion, equivalent to 3.5% of the world's annual GDP. Where is this money flowing? US stocks, Bitcoin, various high-yield assets.

Now the question is: if the Bank of Japan really raises interest rates, how will this $4 trillion arbitrage capital retreat? It could trigger a chain reaction comparable to the subprime mortgage crisis. Stocks, funds, Bitcoin, gold — no one will be able to stay unaffected.

Therefore, on December 19, the global markets might experience a huge shake-up. You need to prepare your response strategies in advance.