The Bank of Japan has just sent a major signal. On December 19, the Bank of Japan announced a 0.25 percentage point increase in interest rates to 0.75%, reaching a new high not seen in decades.

Why did this move trigger market turbulence? The core reason lies in the dramatic reversal of yen arbitrage trading. In recent years, Japan's ultra-low interest rate environment has continuously channeled cheap funds into global markets—from stocks to bonds to risk assets, with yen depreciation becoming a "magic key" for global investors.

But when the central bank starts raising rates, the situation changes. The relative strengthening of the yen significantly reduces the attractiveness of arbitrage trades, causing funds that borrowed yen to invest in other assets to start flowing back. Any change in liquidity conditions is highly sensitive, and such policy shifts often trigger rapid market adjustments—sometimes so intense that traders are caught off guard.

For the crypto market, the tightening or loosening of global liquidity directly impacts the demand for risk assets. Every step of the central bank's policy is worth close attention.