There is an old saying in the crypto world: When Japan moves, Bitcoin drops by 20%-30%. It may sound exaggerated, but looking at historical data, you'll find that this pattern is quite accurate.

Recent actions by the Bank of Japan serve as vivid examples. In March 2024, a rate hike caused Bitcoin to plunge about 23%. By July, before people could catch their breath, another wave hit, with the decline expanding to 26%. The most severe was in January this year, with a deep correction of 30%-31%. As the voices calling for rate hikes in 2026 grow louder, many are asking: Will this curse happen again?

To understand why this happens, we need to think from a monetary perspective. Yen arbitrage funds significantly contribute to the growth of the crypto market. When the central bank raises interest rates, the cost of these funds increases, squeezing the original arbitrage space, leading to large-scale liquidations. The main drivers of this operation are institutions and hedge funds, accustomed to high leverage. Once their liquidation thresholds are triggered, they sell off en masse, causing a "stampede-like decline." When the Bank of Japan announced raising rates to 0.75% in December last year, Bitcoin's price dropped straight from a high of $120,000 to around $86,000, a decline of over 15% in 60 days, illustrating the most direct impact of liquidity shocks.

However, history doesn't repeat exactly. The situation in 2026 will differ from previous instances. A notable change is that the market has already anticipated the Bank of Japan's moves, with many investors adjusting their positions early. This reduces the shock impact of sudden attacks. Additionally, the Federal Reserve is likely to start a rate-cutting cycle in 2026, which could partially offset the pressure from Japan's rate hikes. These two forces are in a tug-of-war, and the final outcome will depend on which side has greater strength.