The Bank of Japan suddenly changed its stance — at a time when central banks worldwide are generally on the sidelines, they counterattacked by raising interest rates by 25 basis points, directly pushing the rate to 0.75%. This move has disrupted the entire market’s expectations.

The long-term depreciation of the yen indeed needs to be halted. With inflationary pressures present, they cannot sit idly by. But the side effects of rate hikes are also hard to ignore: astronomical national debt burdens, squeezed corporate profit margins, and tougher times for those with mortgages. This is a costly decision.

More importantly, those carry trade transactions revolving around the yen are affected. Large funds are starting to withdraw, short positions are being wiped out, and exporters’ profit statements have instantly turned black. How long can Japan sustain rate hikes? Is the fiscal situation sustainable? These questions will gradually surface.

Is this the start of a policy shift, or does it lay the groundwork for a bigger risk explosion? The impact of this round of central bank actions on global liquidity and digital assets warrants ongoing observation.