Last night, the financial markets staged a bizarre double whammy — the Nasdaq 100 index rose over 1.38%, and Tesla's single-day increase was 3%, with tech blue chips cheering in unison. Meanwhile, Bitcoin dropped from $85,608 to $83,800, a decline of 2.8%; Ethereum plummeted straight down to $2,833, a drop of 4.46%, wiping out nearly two months of gains. Even the stock prices of compliant trading platforms adjusted accordingly, falling more than 2%.

This contrast has left many crypto investors feeling exhausted. When US stocks rise, they eagerly expect the crypto market to follow suit, only to face a waterfall decline; wanting to cut losses but fearing missing out on a rebound, they grit their teeth and hold on, watching their accounts shrink. What underlying logic is behind this market movement? Frankly, the culprit is that seemingly mild interest rate hike decision by the Bank of Japan.

Many people get nervous at the words "interest rate hike," and are scared by exaggerated headlines that suggest a significant 75 basis point increase. In reality, the Bank of Japan only raised rates by 25 basis points, from 0.5% to 0.75%. This is the highest level in 30 years since 1995, but don’t be fooled by the phrase "only 25 basis points" — this is the real turning point.

It signals the end of an era: the good days of cheap yen borrowing are over. Over the past decade, global institutional investors have been playing an arbitrage game — borrowing yen at near-zero costs and then entering the crypto market to buy Bitcoin and Ethereum. The scale of this "yen arbitrage" is estimated to be as high as $19 trillion. As the expectation of yen appreciation strengthens and borrowing costs rise, this liquidity artery is beginning to constrict.