The cryptocurrency market has been feeling the pressure lately. Bitcoin has dropped from over 90,000 to the low 80,000s in a single swoop, and the story behind it is closely linked to the Bank of Japan's actions.

Essentially, the issue stems from Japan's yen carry trade, which has been a "money printing machine" for years. For a long time, Japan's interest rates have been ridiculously low, allowing market makers and large funds to borrow cheap yen, convert it into dollars, and scoop up high-yield assets—high-beta assets like Bitcoin naturally became the main target. When liquidity loosens, BTC can surge wildly. But the game might be changing.

Tomorrow (19th), the Bank of Japan is highly likely to announce a 25 basis point rate hike to 0.75%, the highest level in the past 30 years. Market pricing agency Polymarket has 98% confidence in this expectation. Once the rate hike is implemented, the problem arises: the cost of borrowing yen will instantly rise, eliminating the arbitrage space, prompting large funds to start withdrawing early, unwinding carry positions back to Japan, and tightening the global liquidity environment.

As a typical risk asset, Bitcoin will be hit hardest. Looking at history makes it clear—when the rate was raised in March 2024, BTC fell 23%; in July, it dropped another 26%; and by January 2025, it plunged 31%. This time, the market is highly sensitive, running ahead of the policy implementation. Exchange net inflow data has surged, and leveraged longs have been wiped out completely.

The short-term situation may still have variables. If the announcement does not signal a super hawkish stance, a rebound could occur. But if the decision is more hawkish than expected, the psychological level of $70,000 is not entirely out of reach. Liquidity is already thin at year-end, and volatility is naturally expected to rise.

For holders, maintaining a calm mindset is crucial at this stage—don't rush into aggressive moves. Waiting for the dust to settle before assessing the market is the safest approach. Whenever macro winds shift, the crypto market tends to be the first to feel the impact—this has become a routine script in the circle.