Less than a few hours until the Bank of Japan's meeting decision, seasoned player Wang Ze, who holds ten thousand bitcoins, made an urgent decision—convert 20% of his position into stablecoins. When the market is filled with anxiety, a document about the over-collateralization mechanism becomes his only reassurance.

At 2 a.m., the crypto analyst discussion group exploded. A data chart was rapidly circulating in the channel: after the last three rate hikes by the Bank of Japan, Bitcoin respectively dropped 23%, 26%, and 31%. And now, another decision is imminent—what will happen this time?

Global traders are all focused on Washington, but few realize that what is about to happen in Tokyo could be even more deadly. Japan is the largest foreign holder of U.S. debt, and this position means that every move by the Bank of Japan can cause big waves in global dollar liquidity.

The data is clear—whenever the Bank of Japan tightens policy, high-risk assets are the first to be cut. Crypto, due to its volatility, is often the first to be thrown out.

The root cause is actually quite old: the "yen arbitrage trading" strategy has been running for decades. International capital borrows yen at near-zero cost and then invests the money into high-yield assets like U.S. stocks and cryptocurrencies. Once the central bank hikes rates, the entire logic reverses—the cost of borrowing suddenly spikes, forcing investors to liquidate positions and pay off debts, causing market crashes.

The current problem is that the market is already extremely fragile. Bitcoin has been falling from its high, leverage is flying high, and on-chain volatility is eroding the patience of every participant.