The crypto world has recently been calm on the surface, but undercurrents are surging. The Bank of Japan has confirmed a rate hike on December 19, with some online exaggerated claims of a 75 basis point increase. The actual increase is 25 basis points, raising the interest rate from 0.5% to 0.75%. Don't underestimate these 25 basis points; for the entire crypto market, it's a watershed moment.

Over the past decade, the low-interest yen has been a "cash machine" for arbitrage funds. Many traders borrow yen at ultra-low costs and then leverage it to trade cryptocurrencies. This arbitrage chain has been running smoothly. But once interest rates rise, the attractiveness of this model drops sharply. Funds holding leveraged positions in yen will inevitably withdraw, first impacting major cryptocurrencies like Bitcoin and Ethereum.

The current state of the crypto market is a bit delicate: on the surface, it seems quite stable, but there are several pressure points. First, those leveraged yen positions will be forced to close, and a large amount of sell orders flooding into the market—who can handle that? Second, risk assets as a whole need to be revalued; the coins in hand might suddenly turn from a "wealth freedom" dream into real losses.

But there's no need to run away immediately. The most important thing is to watch how Bank of Japan Governor Ueda Kazuo speaks at the press conference. His wording can directly influence market expectations for future policy directions, which in turn directly affects the movement of arbitrage funds. The key lies in his attitude and subsequent guidance.