Japan has raised interest rates, and recently this chart has been going viral. Let me share my thoughts:

First, let's look at the first three times Japan raised interest rates in the chart.

The first was in March 2024, which was the first rate hike in Japan since 2007. In addition to raising rates, the Bank of Japan also announced the removal of the Yield Curve Control (YCC) policy and stopped purchasing risk assets such as exchange-traded funds (ETFs). This is seen as a turning point where Japan, after about 11 years of "super accommodative monetary policy," begins to normalize. The significance of this turning point outweighs the actual impact of the rate hike. At the same time, Bitcoin had risen from $20,000 to $73,000 over six months, and the market's correction due to the negative news of Japan's rate hike is entirely acceptable.

The second was on July 31, 2024, and on August 2, the US unemployment rate data triggered the Sam rule. This time, the panic was caused by expectations of a US recession combined with Japan's rate hike. It indeed led to carry trade deleveraging, but later it was seen that the US did not fall into a recession. After some volatility, the market recovered, and there was no major reversal of carry trades.

The third was in January 2025, but on this chart, you see a 31% decline, reaching its lowest point in April. The sharpest drops occurred in February and March. What caused that? The main reason for that decline was not carry trade but Trump's tariff policies, which created a big hole in the market.

So, for these three major declines in the chart, if we must attribute them to Japan's rate hikes, I personally believe only the July last year was caused by the expectation of a US recession combined with Japan's rate hike.

What will happen this time? I don't know, but I think this time there is no US recession, nor the recession expectation of last July, and Bitcoin has not just surged several times with a need for correction. At least, I am not worried about the overall direction. Whether the market sentiment triggers large fluctuations is beyond my control. I won't predict short-term volatility; I only set risk controls and re-entry conditions based on triggers.