Is the Bank of Japan really going to take serious action this time? The answer from the market is very direct: a 76% probability of interest rate hike in December, soaring to 90% in January. The statement from the central bank governor Kazuo Ueda is also quite straightforward—"We will adjust the policy interest rate as appropriate based on the economy, inflation, and financial market conditions." In other words: get ready for an interest rate hike. Look at the two-year government bond yield, which has already surged to its highest level since 2008; money is voting with its feet.

Why must it be done? Inflation has consistently exceeded 2%, wages have risen, and prices are climbing. The depreciation of the yen has led to soaring import costs. But the more critical issue is that the game of yen carry trades can no longer be played. For the past few decades, Japan's interest rates have been close to zero. How many investors have borrowed yen at ultra-low costs, converted it into dollars or euros, and invested in the US stock market and cryptocurrencies to earn interest differentials? How exaggerated is the scale? Between 14 to 20 trillion USD! This amount of money has supported the prices of countless assets over the decades, including BTC.

The atmosphere is about to change.

What does a rate hike mean? The yen will appreciate, and those carry trades will have to be closed—borrowing costs have gone up, and investors can only sell their US stocks and cryptocurrencies to exchange for yen to pay off debts. Global liquidity tightens, and funds begin to flow back to Japan, with high-risk assets being the first to suffer, and cryptocurrencies taking the brunt of it. As risk aversion rises, money flows from volatile assets like BTC to more stable ones like bonds. In the long term, after interest rates rise, venture capital will also become more cautious, with traditional industries favored, making financing for the crypto industry more difficult.

Key time nodes: December 18-19 Japanese Central Bank interest rate meeting, mid-December Federal Reserve interest rate decision. The good news is that the probability of a Federal Reserve rate cut in December is already maximized, can it hedge the impact from Japan? Let's wait and see.