Last Friday's early morning sell-off caused many accounts to turn green. Panic sentiment spread, but the root cause of this downturn may not be within the crypto circle itself.

The real variable comes from across the Pacific. On December 18-19, the Bank of Japan will hold its final monetary policy meeting of the year. According to Polymarket data, the market has priced in a 98% probability of interest rate hikes to 0.75%. This is the highest interest rate level in Japan in 30 years and has become almost a certainty.

Why would a single decision by the Bank of Japan trigger a global crypto market crash? The answer lies in yen arbitrage positions.

For many years, the cost of borrowing in yen was nearly zero. Large amounts of capital borrowed yen at extremely low costs, exchanged it for dollars, and entered the crypto market to earn the interest spread. This arbitrage strategy was once a standard way to harvest profits. But once the rate hike is implemented, the game changes entirely—borrowing costs skyrocket, and the previously easy gains turn into debts. Institutions and big investors have no choice but to sell BTC for yen to repay their loans.

This is not a normal market correction; it’s the shutting down of the global liquidity valve. Cheap liquidity supply is cut off, large funds are accelerating their exit, and support levels for BTC become illusory. Looking back at history, the last time the Bank of Japan raised interest rates, BTC fell by 12% that month. The impact this time will be even more direct.

The current situation is a liquidity pump working at full capacity. Those who exit early avoid risk, while those holding on may face deeper retracements. In the short term, this macroeconomic bearishness is almost unavoidable—policy is set, and the market can only respond passively.

The more significant the decline, the more caution is needed against impulsive buying. Once risks are fully released and panic emotions have completely dissipated, waiting for the right moment may be the smarter choice. Protecting your principal is the only way to be ready for the next opportunity.