The Bank of Japan's rate hike this time could have a much bigger impact than you imagine.

According to market expectations, the BOJ will raise interest rates to 0.75% on the 19th. It sounds insignificant, but for global capital flows, it's a turning point.

In recent years, Japan's interest rates have been near zero, and savvy arbitrageurs have been playing a classic strategy: borrowing yen at extremely low costs and then converting to USD to buy high-yield assets like Bitcoin and US stocks. As long as the exchange rate difference and yields can cover the costs, this business can be profitable. But once the central bank truly hikes rates, borrowing costs instantly rise, and the previous arbitrage space is squeezed to the breaking point. These institutions then have to sell off their high-risk assets to buy back yen and repay debts. Industry calls this "carry trade unwinding," and the result is a sharp withdrawal of global liquidity.

Looking at past records shows how fierce this can be:

In March 2024, that rate hike caused Bitcoin to drop by 23%.

In July, another rate hike led to a 26% decline.

Most recently in January, the drop was nearly 30%.

This time, almost no one doubts that rates will be raised, so Bitcoin has already started to "react" in advance over the past couple of days. In the short term, be prepared for further declines, possibly approaching $70,000. Volatility will be high, which is normal when such news occurs.

However, historical experience is also quite instructive. Every time there is a clear negative expectation, the actual implementation often triggers a rebound. The market shifts from "killing expectations" to "buying the fact," and there are often contrarian opportunities in between.

Simply put: Japan raises rates → global carry trade unwinds → funds withdraw from high-risk assets → Bitcoin faces pressure. In the short term, we need to stay vigilant and manage risks carefully, but in the long run, such negative news is usually temporary.

The market in the next couple of days is critical. Keep an eye on the yen's direction and US stock performance, and don't be scared into reckless moves by short-term fluctuations. Once the news is officially confirmed, it might actually be an opportunity to position.