Recently, a very magical phenomenon has appeared in the crypto world - the price movement of Bitcoin is almost completely synchronized with the Exchange Rate of the Japanese Yen!

On December 2, German financial analyst Holger released a significant observation: the fluctuations of BTC are now highly correlated with the rise and fall of the Japanese yen, and this is no coincidence.

The root of this can be traced back to Japan's monetary policy. For the past decade or so, a popular strategy in the global capital markets has been the yen carry trade. In simple terms, during Japan's zero interest rate era, institutions borrowed yen at extremely low costs, converted them into dollars, and invested in high-yield assets, with Bitcoin and tech stocks being popular targets. Just how exaggerated is the scale of this operation? Conservative estimates suggest it exceeds $30 trillion, and it has effectively become an invisible force driving up the crypto market.

But this year the situation has changed. The Bank of Japan has started raising interest rates, causing the cost of borrowing to rise sharply, and the arbitrage space has been compressed. Those leveraged funds that relied on low-interest yen now have to close their positions and withdraw. When the yen appreciates, it means that these funds are flowing back, and Bitcoin, as an important asset to absorb these funds, naturally fluctuates accordingly.

You see, recently BTC has retreated from $90,000 to $83,000, and the reason behind this is actually the adjustment of this wave of funds. The chain reaction of global monetary policies cannot escape the crypto market.