Recently, there has been a "horror story" circulating in the financial world—not about a certain coin dropping to zero, nor about a market circuit breaker, but about Japan's "printing press," which has been running for twenty years, preparing to shut down.

The yield on Japan's two-year government bonds has broken 1%, marking the first time since 2009. Does it sound unremarkable? But those who understand have already started calculating whether their positions can withstand the upcoming chain reactions.

**How outrageous has Japan been over the past few years?**

Interest rates have been hovering near zero for a long time, sometimes even going negative. What does this mean? Borrowing money incurs no interest, while saving money requires paying handling fees. As a result, global capital is frantically taking advantage of the situation: borrowing yen at nearly zero cost in Tokyo, converting it to dollars, and investing it in U.S. stocks, bonds, gold, and cryptocurrencies... This strategy has a professional term called "Yen Carry Trade" (Yen Carry Trade).

Leverage is added layer by layer, and the market grows larger and larger. Over the past decade or so, this food chain has supported countless hedge funds and asset management institutions, and indirectly provided massive liquidity to the cryptocurrency market.

**But now, the rules of the game have changed.**

The yield on Japanese government bonds has climbed to 1%, which means two things: first, saving money finally brings some returns, and second, the cost of borrowing is starting to visibly rise. The Bank of Japan's stance has also shifted—after decades of deflation, it can no longer keep the economy submerged in the warm waters of negative interest rates now that there are signs of inflation.

Translated into plain language: The World Bank's "free ATM" model is coming to an end.

**What does this mean for the market?**

First, the cheap leverage is gone. The strategy of amplifying returns with the low interest of the yen is becoming less attractive as costs rise. Secondly, the pressure for capital to flow back to Japan is increasing—since Japanese government bonds are starting to yield returns, why take the risk to venture outside? Finally, those markets that rely on yen liquidity, including cryptocurrencies (, may experience a round of "withdrawal."

The tide hasn't completely receded yet, but the direction has changed. In the coming months, let's see who is swimming naked.