The global financial landscape is undergoing subtle yet profound changes. The Bank of Japan has ended its negative interest rate and initiated a rate hike cycle, creating an interesting hedge against the Fed's upcoming interest rate cut expectations — this reverse operation breaks a classic arbitrage model that has lasted for decades.

For a long time, the yen, as the cheapest source of borrowing costs globally, attracted a large number of arbitrageurs. They borrowed low-cost yen and turned around to buy high-yield assets such as U.S. Treasuries or U.S. stocks, profiting from exchange rate differences and interest rate spreads. This strategy had been working for decades until now, when cracks have appeared.

When the Bank of Japan began to raise interest rates, the cost of borrowing yen increased, while the Fed simultaneously cut interest rates, breaking the previously stable arbitrage chain. Institutional investors holding such positions—especially large asset management firms in Japan—are facing pressure to liquidate. They need to sell U.S. stocks and bonds to pay off more expensive yen loans. This is not a trivial matter; we are talking about a trillion-level outflow of funds.

When such a large amount of capital withdraws from traditional markets, it inevitably seeks new destinations. This is exactly the moment when the market begins to pay attention to non-correlated assets. Bitcoin, as an asset class relatively independent of the traditional financial system, once again reveals its hedging properties and allocation attractiveness.

What’s more interesting is that we are seeing more than just Bitcoin. Dogecoin has received recognition as a financial product in Japan, and the trading enthusiasm for Meme coins continues. These phenomena point to the same signal: hot money is searching for new allocation targets. When traditional markets experience greater volatility and unclear returns, this portion of funds will flow into more narrative-driven and more volatile assets.

Another key variable is the Fed's policy direction. The Fed chair nominee appointed by Trump has signaled that the market generally expects liquidity to be re-released once the new term begins. If the supply of dollars increases, combined with a wave of yen arbitrage liquidation, global capital will face a significant reallocation.

In this macro context, the uniqueness of the cryptocurrency market begins to stand out. Compared to traditional financial assets that require complex trade-offs between Central Bank policies, the crypto market offers a relatively independent playing field. Its high volatility is no longer a drawback; rather, it has become a reason to attract "smart money"—during times of increased uncertainty, some institutions choose to allocate part of their funds here.

In the long term, the era of cheap money is truly coming to an end. The combination of the turning point in Central Bank policies and the political cycle means that the global liquidity environment will become more complex and variable. Huge amounts of capital need to find new directions. Although the crypto market still carries risks, its non-correlation, independence, and the continuous evolution of market narratives are making it a consideration for diversifying asset allocation.

Back to specific cryptocurrencies: BTC, as the largest cryptocurrency by market capitalization, and ETH, as the representative of smart contract platforms, have both gained market attention amidst this change in capital flows. The key lies in understanding the macro logic behind this, rather than being misled by short-term fluctuations. Opportunities often lie in the eye of the storm, but the prerequisite is that you see the direction of the storm clearly.