The market is facing the impact of two major key events. The Bank of Japan will announce its monetary policy decision on the 19th, with a strong expectation of rate hikes. At the same time, the US CPI data will be released tonight at 9:30. The combination of these two pieces of news could lead to quite volatile market fluctuations in the near term.

**Why is Japan's rate hike so critical?**

In recent years, a classic arbitrage pattern has been widely used—institutions borrow low-interest Japanese yen, convert it into US dollars, and invest in high-yield assets. This trade is profitable mainly because of the cheap yen interest rates. However, once the Bank of Japan raises interest rates, the game changes completely. Borrowing costs increase, and the yen may appreciate, which means the previous arbitrage chain could instantly become invalid. Institutions will inevitably need to unwind large positions, selling various assets to buy back yen for debt repayment. As a high-risk asset, cryptocurrencies will face selling pressure first.

**Why is the CPI data also so important?**

Inflation data directly influences the Federal Reserve's policy expectations. If the CPI continues to decline, the probability of a rate cut in January increases, and the dollar depreciation expectation will attract funds back into high-yield assets, which is positive for the crypto market. Conversely, if inflation remains high, the Fed may hold steady or continue to raise rates, causing funds to flow into safe-haven assets like the dollar, putting pressure on the crypto market.

**Risks and Opportunities**

In the short term, these two major events are bound to trigger market volatility. Whether Bitcoin can hold the support level of $80,000 will be a key point in judging the subsequent trend. The global arbitrage unwinding triggered by Japan's rate hike may cause a chain reaction. But in the long run, what truly determines the direction of cryptocurrencies is the monetary policy of major central banks worldwide. Staying alert, managing risks, and waiting for clear signals from policy developments are the best strategies at this stage.