The Bank of Japan raised its policy rate to 0.5% this year, and the 10-year government bond yield has soared past 1.9%. The market is now betting on whether there will be another 25 basis point hike on December 19th, with the probability looking over 80%. What does this mean? The "zero interest rate + yen carry trade" game that has been played for twenty years is officially over.

The recent crypto market crash has the unwinding of yen carry trades as the main culprit. Everyone knew how the old playbook worked: borrow yen at low interest, convert to USD, then pour into BTC or US stocks. Now that chain has broken, and money is being forced to flow back. From early December to now, BTC has already dropped from 92k to around 86k, with over $1.5 billion liquidated in the past 24 hours. The USD/JPY exchange rate has plunged from 160 to 143, and the yen's appreciation has directly accelerated the selloff in risk assets. US stocks and crypto are falling together, miner hash rates are down 5%-12%, and selling pressure continues to build.

Looking ahead, this is a double-edged sword. The negative side is obvious: global liquidity is tightening further, and high-leverage altcoins will continue to bleed. But there are quite a few positive factors as well—there’s a high probability the Fed will cut rates by 25 basis points in December, and the combination of "Japan tightening, US easing" will weaken the dollar index, which is actually bullish for BTC’s "digital gold" narrative. Rate hikes themselves also help clean out bubbles, and if the Fed continues to ease in 2026, risk assets might make a strong comeback. Don’t forget the pro-crypto policies expected after Trump takes office in January—strategic reserves, tax incentives—these can partially offset the current negative impact.

In the short term, crypto is likely to remain under pressure for the next month or two, and BTC will probably test the $80,000 to $85,000 range. But I’m still bullish in the mid- to long-term—as long as key support levels hold, it’s a buying opportunity. I suggest reducing leverage, holding BTC and ETH, and avoiding those overvalued altcoins for now.