Japan's Interest Rate Hike: The End of the "Cheap Money" Era in the Crypto Space? Core Event: Japan's Interest Rate Hike Marks Policy Shift Yesterday, the Bank of Japan raised interest rates by 25 basis points, bringing the rate to 0.75% (the highest since 1995). The market appears calm, but this "once-in-thirty-years" policy adjustment is precisely withdrawing the core nutrient of the crypto space—liquidity. Key Logic: The Decline of Yen Arbitrage Trading The core reason for the pressure on liquidity in the crypto space is the contraction of yen arbitrage trading: for decades, global institutions borrowed yen at nearly zero cost and redirected it into high-yield assets like cryptocurrencies to earn interest rate spreads. This operation, worth trillions of dollars, was an important "fuel" for the previous bull market in the crypto space. Now, the interest rate hike in Japan directly raises borrowing costs, significantly compressing the arbitrage space, forcing institutions to sell Bitcoin and redeem yen to repay debts, leading to a "liquidity withdrawal" in the market. Market Impact: Risks and Opportunities On the risk side: Historical data shows that in the 4-6 weeks following Japan's last three interest rate hikes, Bitcoin fell by 20%-30%; currently, combined with the Christmas holiday, market liquidity is already weak, and selling pressure can be magnified more easily. On the opportunity side: If the market fully digests the interest rate hike expectations and panic sentiment peaks, a rebound may occur due to "bad news being fully priced in"; additionally, Japan's unique tightening policy during the U.S. Federal Reserve's interest rate cut cycle may highlight the hedging properties of non-sovereign assets like Bitcoin in the long run. Operational Suggestions Reduce Leverage First: High leverage is the biggest risk currently; during high volatility, liquidation can occur easily, so it is necessary to prioritize reducing leverage and retaining cash. Wait for signals: Do not blindly catch the bottom; focus on the stabilization of Bitcoin at the key level of $85,000 and pay close attention to daily volume reduction signals. Keep an Eye on Medium to Long-Term Policies: Monitor the subsequent interest rate hike pace in Japan and the Federal Reserve's policy direction; if liquidity expectations recover, Bitcoin may rebound first. Core Reminder: When the tide goes out, surviving is more important than making quick money. The market never lacks opportunities; what is lacking is the ability to preserve capital and still have chips to stay in the game.