A decision by the Bank of Japan has shocked the global crypto market. After raising short-term interest rates to 0.75%, a long-standing "yen arbitrage feast" has been forced to come to an end.

This may sound like news from afar, but for investors holding Bitcoin and other high-risk assets, the impact is direct and almost instantaneous. Why? Because for decades, international capital has been financed in yen at nearly zero cost and then converted into dollars, continuously flowing into U.S. stocks, U.S. bonds, and even the entire crypto market. How crazy is this arbitrage game? In a word: cheap yen is the biggest driver of this global asset speculation.

Once the interest rate rises, the rules of the game are rewritten on the spot. Institutional investors start to liquidate arbitrage positions, and a large number of assets are sold off to exchange for yen to repay loans with higher costs. The cryptocurrencies with the best liquidity and the highest volatility naturally become the first targets to be cut. Bitcoin's price subsequently plummets, and market volatility soars.

However, gold is approaching historical highs during this round of turbulence, which is a stark contrast. This reflects a painful reality: when the winds of traditional finance change, encryption assets appear far less reliable to institutional investors than experienced safe-haven tools like gold. Your hesitation on the trading app is a microcosm of the global capital flow reallocation.