The Bank of Japan has finally taken action. The interest rate has been raised from near zero to 0.75%, the highest in thirty years. In simple terms, the era of cheap liquidity that has flooded the global market is coming to an end.

How big of an impact will this have on the crypto world? We need to clarify our thinking first.

In the past few years, a lot of large funds have engaged in arbitrage trading by borrowing Japanese yen—thanks to the low interest rates, the yen became the best financing tool. But now that interest rates have increased, the cost of borrowing yen has skyrocketed. What does this mean? Large positions need to be closed, assets sold off, and the yen bought back. This is the beginning of a chain reaction.

BTC is hit the hardest. It has already fallen below the $86,000 mark this week, and 190,000 traders have been liquidated as a result. Even more painfully, Japan has raised interest rates three times since last year, and each time BTC has dropped more than 20%. Will it be the same this time?

In the short term, the pressure is indeed significant. BTC might even test the $70,000 support level. The market in the coming days is likely to be quite volatile. But history tells us that panic will eventually be released. It is expected that by mid to late January, the market may experience a rebound. That will be the real opportunity. For now? Just watch and wait for signals.