Tomorrow, the Bank of Japan is about to announce its interest rate decision. The market consensus is very clear—there's an 80%-90% probability of a rate hike, with the benchmark interest rate jumping directly from 0.5% to 0.75%. This will be the highest rate in Japan in nearly thirty years.

Many may think this is just an internal matter for the Bank of Japan, but the reality is far more complex. This meeting is likely to become the most critical turning point in the global financial markets this year, with influence potentially surpassing the Fed's rate cut movements.

Why is this so serious? Because decades of zero interest rate policy in Japan have continuously supplied the global financial system with the cheapest funds. These cheap yen are heavily borrowed and then flow into US bonds, stock markets, and of course, cryptocurrencies. How large is this scale? Trillions of dollars. This money has become the most important invisible funding engine for risk assets.

Once Japan starts raising rates, the game changes completely. The cost of borrowing yen suddenly skyrockets, the previous arbitrage opportunities are instantly compressed, and a large amount of capital begins to rush back. Who will be hit first? Certainly those assets with high volatility and leverage—cryptocurrencies.

History has always repeated this story. On the eve of the 2000 dot-com bubble burst, and during the 2006-2007 financial crisis, Japan’s policy shifts often coincided perfectly with global liquidity turning points. Has anyone forgotten the rate hike in 2024? The scene of the crypto market being violently hit still gives people some chills.

The current problem is that the crypto market itself is very fragile. High leverage positions are piled up, market sentiment is tense, and everyone’s thoughts are surprisingly aligned—this itself is a risk signal. Once prices break through a key support level, liquidations will be triggered rapidly, leading to chain reactions, and BTC and ETH could experience quite intense volatility.

But here’s an interesting point—after the storm, it’s not necessarily just ruins. History shows us that Japan’s rate hikes tend to follow a pattern: short-term pain followed by long-term stability. After panic is released and leverage is cleared, genuine institutional funds and long-term investors will reconsider entering the market. At this point, the price may actually become the real bottom.

So the current situation is: speculators need to learn how to avoid risks, but patient investors might be waiting for a better entry opportunity. The wind is changing, and the question is—are you ready to face it?