The ripple effect of the yen interest rate hike is spreading to the global Capital Market.

The most direct impact comes from the arbitrage trading side. For many years, the yen has been the main source of leveraged financing in the cryptocurrency space. The interest rate hike has increased the cost of borrowing yen, forcing massive leveraged positions to be liquidated, with this wave of liquidation involving trillions in funds, causing the volatility of mainstream assets like BTC to widen. Meanwhile, global liquidity has started to flow in reverse—funds are flowing back to Japan in search of higher returns, leading to a sell-off in the US stock and cryptocurrency markets, with Bitcoin experiencing a decline of more than 20% within a single month.

A deeper risk lies in Japan's debt predicament. The proportion of national debt to GDP has already surpassed 260%, the highest level among major developed countries worldwide. Once interest rate hikes continue, it may trigger a selling spiral of government bonds, affecting the entire global bond market ecosystem.

In the face of such a situation, trading strategies need to be adjusted. Reducing leverage is the first step, and closely monitoring policy changes from local compliant trading platforms in Japan is also crucial. If U.S. stocks experience a correlated plunge, some altcoins that are more resilient may actually become an opportunity to buy the dip.