2025-12-30 03:21:18

The Bank of Japan announced an interest rate hike to 0.75%. This seemingly distant policy adjustment in Tokyo is having a tangible impact on the global crypto market through liquidity chains. Money's origin ultimately determines where it flows back—this simple math problem is now playing out dramatically in the Bitcoin and other digital asset markets.

The most direct blow comes from the disintegration of "yen arbitrage." For years, international investors borrowed yen at near-zero costs and invested the funds into high-yield sectors like crypto, continuously injecting liquidity into the market. Now? Lending costs rise, yen appreciation expectations strengthen, and institutions begin to rapidly close positions and recover funds. The market instantly feels the squeeze of being drained. History often follows patterns—each time Japan raises interest rates, Bitcoin usually drops by 20%-30%. This cycle is no different; under the pressure of strong rate hike expectations, Bitcoin once fell below the $90,000 mark, with the total daily liquidation amount surpassing $1 billion.

The root of the divergence lies in the diverging monetary policies of Japan and the US. Japan is tightening, while the US may shift toward rate cuts. The crypto market is caught in the middle, constantly pulled in different directions. Pessimists believe that the retreat of arbitrage funds is powerful enough to outweigh the Fed's easing effects. Optimists, however, insist that dollar liquidity is the ultimate decisive factor. Once the situation clarifies, capital will accelerate into crypto assets.

Interestingly, BitMEX co-founder Arthur Hayes offers another perspective: Japan's real interest rate remains negative, which could imply that authorities are tacitly accepting a weakening yen trend. A weaker yen might, in fact, push Bitcoin's value higher over the long term.

A symbolic case of this shift is the decision by Japanese listed company Metaplanet. They added Bitcoin to their balance sheet to hedge against yen depreciation. The result? The company's market value skyrocketed 48 times. This outcome almost suggests that crypto assets are no longer just speculative instruments in macro upheavals but are becoming genuine strategic assets. The short-term frenzy fueled by hot money and high leverage is losing its effectiveness. The market is forced to calm down and reassess true value.

BTC-2.35%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

13 Likes

Reward
13
5
Repost
Share

Comment

0/400

DeFiDoctor

· 3h ago

The clinical manifestation of this arbitrage fund draining indeed aligns with historical patterns, but the medical records show that risk warnings should be especially attentive—$1 billion in liquidation in a single day indicates that there are still too many leveraged traders.

View OriginalReply0

LiquidationOracle

· 3h ago

Another round of pump and dump, this time it's Japan's turn. The arbitrage game should come to an end.

View OriginalReply0

NeonCollector

· 3h ago

Japan's rate hike wave is really crazy, arbitrage funds are fleeing extremely fast Another 1 billion liquidation, this pace... when can we finally catch a break What does the 48-fold increase in Metaplanet indicate? BTC is really becoming an asset, no longer just gambling If the Federal Reserve cuts interest rates, liquidity should come back, right? It all depends on who moves faster Hayes' perspective isn't bad; Japan's actual negative interest rates, weakening the yen might actually be a positive? Need to think this logic through Japan-US policy reversals, retail investors caught in the middle are truly suffering

View OriginalReply0

SilentObserver

· 3h ago

Japan's first rate hike, a global retreat... Feels like this round of arbitrage is truly a dead end Another divine prediction from Arthur Hayes? How does this guy always manage to profit from contrarian moves Metaplanet's 48x increase... Is it real? Are they secretly telling us something A $1 billion liquidation in one day, now that's a real bloodbath Wait, does negative interest rate actually mean Japan is hinting at supporting a weak yen? Then Bitcoin still has a chance Feels like the old story of "short-term focus on policies, long-term focus on liquidity" is playing out again

View OriginalReply0

LiquidityHunter

· 3h ago

Once again, Japan is causing trouble. The withdrawal of arbitrage funds caught us off guard this time. --- The meteoric 48-fold surge of Metaplanet is truly incredible. It feels like we've found the real hedging logic. --- The divergence between US and Japan policies leaves us caught in the middle, which is really uncomfortable. --- Arthur Hayes' perspective is interesting. Negative interest rates still hint that the yen will depreciate, so does BTC have long-term support? --- This time is different. Hot money games are dying out quickly. It's time to seriously look at the essence of assets. --- A $1 billion liquidation—that's the cost of liquidity drainage. It's a bit embarrassing. --- According to historical patterns, Bitcoin should drop 20-30%. This move was pre-planned. The question is, when will the rebound come? --- The Fed cutting rates vs. Japan raising rates—who wins and who loses is really hard to say. It all depends on how things unfold next.

View OriginalReply0