The next week is crucial. The probability of the Bank of Japan announcing a rate hike on December 18-19 is as high as 91.4%, with the target interest rate rising to 0.75% — the highest in Japan in 30 years. At first glance, the numbers may not seem significant, but the underlying logic behind this shift represents a major change for the entire crypto market.

The Bank of Japan has long maintained an ultra-low or even negative interest rate environment, operating within this ecosystem for generations of investors. Now, suddenly shifting to tightening, most economists are optimistic about a rate hike — according to the latest Reuters survey, over 70 professionals overwhelmingly expect this. Meanwhile, the Federal Reserve has a 92% chance of cutting rates, and the policy squeeze between these two major central banks will reshape global capital allocation patterns.

The real impact lies in the widespread unwinding of "yen carry trades." Over the past decade, low-cost yen financing enabled investors to borrow yen continuously, convert to USD or other currencies, and deploy this capital into high-risk assets — Bitcoin and high-growth stocks are common targets. The logic is straightforward: low borrowing costs, high investment returns, and profit from the spread.

But once Japan raises rates, the game changes. Yen appreciation and skyrocketing financing costs force investors to cut losses and pay back debts, leading to large-scale sell-offs of Bitcoin and other high-risk assets to convert back into yen for repayment. Historical data shows that during past Japanese rate hike cycles, Bitcoin has experienced rapid corrections of 20% to 25%. This time, market analysis generally points to Bitcoin potentially dropping to $70,000 or even lower.

Cryptocurrency markets are inherently volatile, and combined with this wave of macro-driven selling pressure, a significant liquidity crisis is expected to emerge. Close attention should be paid to the mid-December central bank decisions, which could become a key turning point for crypto assets in the near future.