After Japan's interest rate hike was implemented, the price of Bitcoin did not fluctuate significantly, leading many to conclude that "the impact of the interest rate hike has been exaggerated." Some even believe that the Crypto Assets market has already shed the constraints of TradFi policies and embarked on a path of independent operation. However, this idea is actually too superficial.

The impact of Japan's interest rate hike on Bitcoin is not overestimated; the key is that it has not fully manifested yet. When the turning point of global liquidity truly arrives, the lagging effect of Japan's interest rate hike will gradually be released, triggering a series of reactions. By then, the Bitcoin market will face a greater shock.

First, let's talk about the lagging effect of Japan's interest rate hike. The return of yen arbitrage funds is not completed all at once, but is a long-term process that unfolds gradually. Over the past decade, a large amount of yen arbitrage funds have flowed into the global crypto assets market through various means, with these funds typically having an investment cycle of 1 to 3 years, making it difficult to withdraw in the short term. However, after Japan's interest rate hike, the financing costs of yen arbitrage will continue to rise as rates gradually increase. The moment the costs exceed the returns, these funds will need to return to Japan. According to current estimates, the scale of yen arbitrage funds in the crypto assets market exceeds 50 billion USD. Once this portion of funds begins to withdraw in batches, the price of Bitcoin will face sustained downward pressure.

Looking at the ripple effect of Japan's interest rate hike on global liquidity. As a major creditor nation, Japan's interest rate increase will raise global financing costs, and other economies will have to tighten their policies as well. Emerging market countries may be forced to raise interest rates to prevent capital outflows, further exacerbating the tightening of global liquidity. Money in the entire market will become increasingly expensive, and the demand for risk assets will naturally decline.