Ueda Kazuo's statement "Weighing the pros and cons of rate hikes" directly caused a stir throughout the entire financial industry. The market responded swiftly, with December rate hike bets soaring to 90% in an instant, and the two-year Japanese government bond yield hitting a 17-year high. U.S. stocks fell accordingly, and Bitcoin also dropped sharply, creating a tense scene.

Many people think this is just a minor ripple in the crypto world, but the reality is far more complex. Japan's rate hike involves hundreds of trillions of yen in carry trade transactions—this is the hidden liquidity engine. For the past 30 years, Japan maintained a zero-interest-rate policy, during which financial institutions and investors borrowed heavily in yen to buy dollar assets, cryptocurrencies, and other high-yield targets, leveraging to the limit to earn interest rate differentials. Now? Borrowing costs have risen, spreads have compressed, the yen is still appreciating, and account losses are mounting. These players can only aggressively close positions to cut losses, and Bitcoin naturally becomes collateral damage.

But don’t be led by panic. There are three facts worth considering carefully:

First, the Federal Reserve's liquidity measures are hedging. While Japan tightens, the Fed has already lowered interest rates to the 3.5%–3.75% range in December, so the world's largest liquidity source hasn't dried up, and the funding pool remains ample. The crypto market won't face a liquidity crunch.

Second, the market has already digested this. Over the past 21 months, Japan has raised rates three times, so this rate hike is essentially just the realization of expectations. Most of the risks have already been eliminated through previous volatility; it’s not a sudden attack.

Third, Bitcoin has not truly collapsed. After the plunge, it remains stable at high levels, and U.S. stocks haven't broken key support levels, indicating there are still continuous buy orders coming in. Panic is just a short-term emotional release.

Ultimately, Japan's rate hike is not an omen of the end of the world. Its role is to force highly leveraged speculators out of the market and help the entire system find a rational balance again. The real risk in the crypto space has never been a policy from the central bank, but your own greed—blindly chasing highs, risking everything, and going all-in. In this kind of correction, the panicked are short-term speculators, while those with patience and long-term holdings will be the ones laughing last. The regulatory framework has been established, and traditional capital continues to flow into this market. This volatility is just a shakeout before a big bull market.

What do you think about this wave of BTC decline? Is it a golden opportunity to buy the dip, or a warning signal before a bear market? Are you planning to reduce your positions to avoid risks, or to add more while the trend favors?