Seeing the Bank of Japan's recent stance, many are still debating whether another rate hike is coming. Actually, that's the wrong question. The focus isn't on the rate hike itself, but on a deeper shift that's underway.

Japan's economy has been stuck in a deflationary quagmire for a long time, with wages and prices essentially stagnant. Now, the official stance is basically confirming that this situation is changing. The era of deflation is truly coming to an end.

What does this mean? The Bank of Japan has long been the last bastion of cheap funding globally. Its shift in attitude is like someone suddenly closing the world's largest window for cheap financing.

**The interest rate spread logic is reversing**

Previously, Japanese interest rates were far below US rates, allowing arbitrage traders to borrow yen, convert to dollars, and earn the spread. Once the yen hikes rates, this arbitrage space shrinks or even disappears. What’s the result? Large amounts of arbitrage capital will flow back into Japan, pulling liquidity out of traditional financial markets, and this pressure will transmit to more markets.

**Safe-haven attributes will also change**

When global risk events occur, funds typically flow into yen and US Treasuries—standard safe-haven logic. But if the yen hikes rates, its role as a funding currency diminishes, and its safe-haven appeal changes. Global asset volatility may rise, especially for high-volatility assets like Bitcoin, which will be among the first affected.

**Funding costs need reassessment**

Any market relying on global liquidity will face a more expensive and tighter financing environment. This will exert long-term downward pressure on asset valuations. High valuations supported by cheap funding this year will need to be re-evaluated.

**Operational strategies must be adjusted**

First, don’t see this as short-term good news or bad news. It’s a fundamental change in the macro environment that will intensify market volatility, especially during periods of low liquidity. Those using leverage should be more cautious, as the probability of black swan events increases.

Second, avoid following a single narrative. There are always people in the market saying “this time it must go up” or “it will definitely fall,” but these are one-sided views. In this environment, hedging from multiple angles is more necessary.

Finally, keep an eye on USD/JPY exchange rate fluctuations. Sharp movements in this rate are often the earliest signals of changes in global risk appetite. When it moves, other markets tend to follow.

**Summary**

The Bank of Japan’s shift marks the end of the era of cheap global liquidity. The crypto market, already sensitive to macro liquidity, now faces new headwinds. In such an environment, maintaining stability is more valuable than chasing quick gains.