Don't panic!

Bitcoin has dropped directly from over $90,000 to below $85,000. Is your news feed filled with "The joint crackdown by 13 ministries caused the crash"?

Wake up, don't let panic emotions lead you by the nose. The truth behind this wave of decline has nothing to do with those clickbait headlines. Think about it, how many regulatory storms has the crypto world experienced over the years? Every time they shout "ban", the market still moves as it pleases.

The real trigger is across the Pacific - Japan quietly dropped a financial bomb. Their ten-year government bond yield soared to 1.1%, the highest level since the 2008 subprime mortgage crisis!

You might be wondering: What does the interest rate of Japanese government bonds have to do with cryptocurrencies?

Let me break it down for you. For the past decade or so, the Bank of Japan has been the world’s largest "free ATM". Borrowing money at almost zero cost! The elites on Wall Street borrow in yen, convert it to dollars, and profit everywhere—buying U.S. Treasuries for interest, betting on Nvidia for AI, and conveniently hoarding some Bitcoin... Anyway, the cost is nearly zero; losing doesn't hurt much, but winning is a big profit. This strategy is called "yen arbitrage trading," and our crypto market is one of the beneficiaries of this zero-cost game.

But the situation has changed now. Inflation in Japan is out of control, and the purchasing power of the public's savings is continuously shrinking, forcing the central bank into a corner to turn around. The market widely expects an interest rate hike in December, which directly bursts the arbitrage bubble!

Borrowing money now requires paying real interest, so those leveraged positions must be unwound. With the return of funds and position liquidation, the ripple effect will impact not only the debt and stock markets but also the cryptocurrency market cannot escape this round of shock.

So this wave of sharp decline is essentially a chain reaction of tightening global liquidity, not a suppression by any policy. Only by understanding the rules of the game can one avoid being led by market sentiment.