The Bank of Japan is highly likely to raise interest rates by 25 basis points to 0.75% this Thursday and Friday (December 18-19), and the market has already priced this in. But the logic behind this move is actually quite interesting.

What does a rate hike mean? It raises the cost of yen, causes the exchange rate to appreciate, and those arbitrage trades that rely on "borrowing low-interest yen to buy crypto assets" will need to close their positions. This move has historically been quite impactful; after Japan raises interest rates, Bitcoin typically experiences a correction of about 30% within 4 to 6 weeks. Some estimates suggest this time might be milder, with a short-term adjustment of 15-25%, testing the $80,000 to $85,000 level.

It sounds pretty intimidating, but there's really no need to panic.

First, let's talk about expectations—market anticipation for this rate hike is already at 98%. Think about it: those who needed to worry already did so, and most risks have likely been priced in advance. The second point is market size. The crypto market's scale now is vastly different; although Japanese funds are still important, their influence is no longer as absolute as before.

What's even more interesting is what’s happening on the US side—currently, the Federal Reserve is in a rate-cutting cycle, creating a contrast of "loose US policy versus tight Japan policy." Liquidity conditions are complex and not simply tightening. Additionally, historical data shows that the crypto market tends to have a seasonal upward trend around Christmas, which can provide some buffer.

How to respond? Short-term traders should control leverage carefully, as the volatility before and after the decision can be intense, and there's no need to fight it head-on. Long-term investors should see this as noise; alternatively, they can view the pullback as an opportunity to enter gradually.

Ultimately, Japan’s rate hike is just one variable among many in the market, not a black-and-white decisive factor. The key is to focus on actual liquidity changes and replace emotional reactions with rational analysis.