#加密市场观察 Japanese Rate Hike and Its Impact on the Cryptocurrency Market: Is a "Black Swan" Possible?

The probability of the Bank of Japan raising rates on December 19, 2025, is extremely high. The overall market expects a 25 basis point increase to 0.75%, with the likelihood exceeding 80%. Previously, senior officials of the Bank of Japan predicted that after this increase, there could be three more hikes, and the final rate could reach 1.5%.

The upcoming rate hike by the Bank of Japan, its main mechanism being the withdrawal of the decades-supported "cheap yen," will trigger a sharp revaluation of the market.

To understand its power, one must recognize the hidden giant — yen arbitrage trading. Over the past decades, near-zero rates in Japan have made the yen the cheapest financed asset in the world. Investors borrowed yen almost for free, exchanged it for dollars, and invested in the US stock market, emerging markets, and high-yield cryptocurrencies. The scale of this model is impressive: estimates suggest its volume exceeds $19 trillion.

Key Path of Influence: Changing Flows of Cheap Funds

If the Bank of Japan continues to raise rates, this massive cash flow will start to reverse, creating layered pressure on the cryptocurrency market:

1. Direct Impact: Closing arbitrage positions and selling off

· Increased costs: borrowing yen is no longer free, reducing arbitrage potential.
· Exchange rate fluctuations: expectations of rate hikes strengthen the yen, and investors repaying yen loans will face currency losses.
· Forced liquidation: under double pressure, holders of leveraged positions will sell liquid assets first, and cryptocurrencies often top the list. Analysts note that in early December 2025, Bitcoin sharply fell from about $92,000 to $83,800, directly linked to the liquidation of arbitrage positions caused by yen strengthening.

2. Indirect Pressure: reduction of global liquidity and decreased risk appetite

· Liquidity sources shrink: the global market has lost an important source of cheap funds.
· Capital outflows: if yields on Japanese government bonds continue to rise to attractive levels (10-year yield recently hit highs not seen since 2008), this could stimulate capital returning from abroad to Japan, further reducing risky markets.
· Rise in "safety" sentiment: amid policy divergence — "tight policy in Japan and possible easing in the US" — uncertainty in global markets increases, and demand for safe-haven assets like Bitcoin rises.

Will this be a "black swan"?

Most likely, no — it’s not a fully "black swan," but tail risks should not be ignored.

· Already priced in: the market currently highly anticipates a rate hike by the Bank of Japan on December 18-19, with a probability of 70-80%. The true "black swan" is an unexpected sudden shock, whereas the market is already gradually perceiving this.
· Partially priced in: the Japanese government bond yield curve has risen significantly since the beginning of the year, reflecting market expectations of policy change.
· Main risk: if rate hikes or their pace surpass expectations, or at year-end when liquidity is already limited (for example, December 19), a chain reaction with a leverage crash could occur.

Market Reaction Forecast: Short-term Turmoil and Long-term Divergence

According to analysts, the market reaction may unfold in three stages:

Short-term (a few days before and after the decision): high volatility and downward pressure.
This is the most tense period for the market. Any signals of a more aggressive policy will quickly trigger sell-offs through the closing of arbitrage positions. Investors should be especially cautious of extreme fluctuations with leveraged altcoins.

Medium-term (several weeks or months): seeking new equilibrium.
After panic selling subsides, the market will begin revaluation under new liquidity and policy conditions. It is important to note that some analysts believe that resolving uncertainty (the so-called "bug has fallen") can eliminate significant ambiguity. Historically, Bitcoin shows resilience after such macroeconomic stresses. Additionally, yen strengthening will reduce costs for Japanese investors investing in dollar-denominated crypto assets.

Long-term (structural impact): rebuilding the global crypto-financing landscape.
If Japan enters a prolonged cycle of rate hikes, it will deeply influence the global capital flow. This may force the crypto market to reduce dependence on a single cheap credit instrument. Clear regulatory frameworks and the possible rollout of the digital yuan (CBDC) could attract new regulated institutional investments.

Response Strategies:

Overall, rate hikes in Japan systematically impact the cryptocurrency market by reducing global liquidity and testing leverage levels and risk appetite.

Investors are advised to focus on:

· Reducing leverage: this is a primary step to counter macroeconomic shocks.
· Monitoring key assets: during market turbulence, the most resilient are liquid and large assets — such as BTC, ETH.
· Paying attention to leading signals: closely watch USD/JPY exchange rate, Japanese government bond yields — these are early indicators of capital flows.

Every significant market test simultaneously reveals risks and assesses the long-term value and strengths of investment narratives. This time is no exception. #广场发帖领$50 #参与创作者认证计划月领$10,000 $BTC