The Bank of Japan raised interest rates by 25 basis points as scheduled, but the market reaction was somewhat lukewarm. Actually, this is not surprising — everyone already anticipated this move and has priced it in advance. The real question is what will happen after the rate hike.

Yen arbitrage trading is starting to unwind, which has a significant impact on Bitcoin. Investors need to sell high-risk assets to buy yen and pay off debts, resulting in widespread selling in the market. It looks fierce, but we've seen similar situations in the past.

Looking back at the series of central bank rate hikes in 2024 and 2025, Bitcoin typically drops 20%-30% in the 4 to 6 weeks following these increases. But whether this cycle will repeat depends on how the Bank of Japan acts next, combined with the ongoing game between the Fed and other factors.

If the Bank of Japan continues to raise rates, the long-term impact could be quite painful. Borrowing costs will rise, risk appetite in global markets will be suppressed, and assets like Bitcoin will face real downside pressure. Additionally, the Fed's rate cut window is closing quickly, and market liquidity is gradually tightening. This environment is not very friendly to high-risk assets.

In the short term, volatility may be limited, but if the pressure to hike rates persists, Bitcoin will face prolonged downward pressure. Next year's situation is expected to be even more complex.