The Bank of Japan may adjust its interest rate policy at the December 18-19 policy meeting, and this news has recently sparked a lot of discussion in the crypto community. If a rate hike does occur, the world’s largest yen carry trade chain could face disruption.

Let’s talk about the transmission path. In recent years, under a low interest rate environment, a large number of institutions have borrowed yen at near-zero cost and then bought U.S. assets or cryptocurrencies to earn the interest rate spread. Once the Bank of Japan raises rates, borrowing costs rise, the yen strengthens, and these institutions may be forced to sell their holdings of highly liquid assets like BTC and ETH in order to repay their now more expensive debts.

This operation sounds simple, but market reactions are often a chain reaction: selling pressure emerges → prices fall → highly leveraged positions get liquidated → panic sentiment spreads → buyers hold back, causing liquidity to tighten further. Last year, when the BOJ adjusted its YCC policy, BTC saw a significant short-term pullback. Although the situations aren’t directly comparable, if action is taken this time, major volatility is likely unavoidable.

However, from another perspective, this type of liquidity contraction driven by macro policy often has little to do with the fundamentals of the crypto industry itself. If it’s just a short-term wave of panic selling, those who are bullish on the industry in the long run may actually see it as an opportunity to reallocate into core assets. After all, when market sentiment fades, valuable things remain valuable.

Of course, specific strategies vary from person to person. Some choose to reduce positions in advance to avoid risk, others plan to wait for volatility and then enter opportunistically, and some simply don’t care about short-term fluctuations. The key is not to blindly increase leverage, especially when macro uncertainty is high—surviving is more important than anything else.