2025-12-24 12:23:43

Ladies and gentlemen, recent market signals are worth careful consideration. The Bank of Japan has taken action—although a 0.75% interest rate may not seem like much globally, for Japan, this marks a rare "high-yield environment" that hasn't been seen in decades. This seemingly ordinary policy adjustment actually involves an entire global capital chain behind it.

Imagine the operation of the global financial markets over the years: the endlessly borrowed cheap yen. Hedge funds, retail investors, and even institutions are all playing the same game—using yen financing to exchange for dollars or other high-yield assets, from US stocks and bonds to various crypto market instruments, forming a complete arbitrage chain. This "yen-based" model has supported countless financial participants.

But things are changing. The BOJ's move signals that the era of "cheap yen" is truly coming to an end. Financing costs are rising, and positions maintained with high leverage are starting to come under pressure. Some funds are being forced to close or adjust their positions, leading to some "passive selling pressure" in the market, as borrowers need to repay their debts.

At this point, there's an interesting contrast: on one side, institutions and retail investors are dealing with the pressure from rising arbitrage costs; on the other side, many savvy participants are quietly adjusting their tactics. Some Japanese household investors (like those "Mrs. Watanabe") are re-evaluating their global asset allocations. They won't passively exit but are rethinking—deciding which assets are worth holding and which need to be shifted. This "mindset difference" between institutions and retail investors often causes short-term market volatility and could signal a mid-term trend reversal.

Mainstream cryptocurrencies like ETH and SOL may experience phased fluctuations during this reallocation process. However, in the long run, such adjustments tend to filter out assets with genuine fundamental support.

ETH-1,12%

SOL-1,49%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

6 Likes

Reward
6
7
Repost
Share

Comment

0/400

DiamondHands

· 13h ago

Cheap yen is truly gone. Those who relied on it to make a living are now panicking. Waiting to see who gets liquidated—that's the real show. Mrs. Watanabe is rebalancing; what about us? Raising interest rates instantly turns leveraged positions into bombs—feeling good or not? Wake up, 0.75% isn't much for the global economy, but it's a nightmare for arbitrage chains. It's really just that cheap money is running out; the real test is yet to come. ETH, SOL are about to take a hit, but this also presents an opportunity to select assets. As financing costs rise, those high-leverage players should admit defeat. The difference in mindset between institutions and retail investors is the source of volatility—smart people have already adjusted. The era of cheap yen has ended, a major reshuffle has begun—let's see who can survive till the end.

View OriginalReply0

alpha_leaker

· 12-25 10:04

Is the cheap yen about to disappear? The arbitrage traders better start panicking... A liquidation wave is coming, the crypto market needs to be prepared Is Mrs. Watanabe about to buy the dip? Let's watch the show 0.75% is really an outrageous number for Japan Thinking back to the last time the yen appreciated... Wow, a leverage explosion scene In the long run, it still depends on the fundamentals; in the short term, it's just a matter of gambling on sentiment Is now the time to buy the dip or to cut losses? That’s the real question The arbitrage chain has broken, who suffers the most? It’s definitely those with full leverage positions... ETH, SOL might need a washout this time The Bank of Japan’s move is quite aggressive As financing costs rise, those fragile positions will be directly GG

View OriginalReply0

MeaninglessGwei

· 12-24 12:53

Wow, Mrs. Watanabe is about to make a move. This is the real show. Once the Japanese yen financing chain loosens, many people's arbitrage dreams will be shattered. 0.75% may not sound like much, but this thing is truly a nuclear bomb level for Japan. There will definitely be blood in the short term, but long-term asset screening is actually a good thing. ETH and SOL that are bought now might just be picking up bargains. The liquidation wave is coming, and the opportunity to bottom fish is not far off. It feels like the market will go through a baptism before the end of the year; only those who survive are true assets.

View OriginalReply0

ContractFreelancer

· 12-24 12:52

Cheap yen is gone, now the arbitrage traders are going to cry. The era of betting on leverage is about to change.

View OriginalReply0

SnapshotLaborer

· 12-24 12:50

The cheap yen is really coming to an end... The previous leverage game now needs to be repaid. Mrs. Watanabe is quietly adjusting her positions, and this is the real opportunity. In the short term, there is indeed panic, but in the long term, it can filter out good assets. This wave, SOL might take a hit. This move by the Bank of Japan has reshuffled the global capital chain. Those who relied on the yen for their livelihood will have to find new business, and the difference in mindset is well explained. Financing costs are rising, and those with high leverage should start to run. Let's wait and see; such adjustments are often a bottom signal. The key still depends on whether ETH can hold up.

View OriginalReply0

SnapshotBot

· 12-24 12:45

Damn, is the era of cheap Japanese Yen really coming to an end? Those guys who rely on arbitrage are starting to panic. There aren't that many carry trade tricks left; let's see who can still hold their ground. The key is whether ETH and SOL will be hammered out of blood, or if this is a good window for bottom fishing. The actions of Mrs. Watanabe are the real signals; wherever they turn, we follow. The Bank of Japan's move has really hurt a lot of people. Rising financing costs mean a big cleanup, and junk projects are going to be wiped out. After this adjustment, we'll see who truly has solid fundamentals. Prosperity supported by high leverage is inherently虚, sooner or later, debts must be paid. But in the long run, this wave might actually be a good opportunity for gold rush.

View OriginalReply0

GateUser-ccc36bc5

· 12-24 12:26

The Bank of Japan's move is really aggressive. The era of cheap yen is gone... Those who rely on arbitrage to make a living are probably going to panic. --- Mrs. Watanabe is quietly adjusting her positions. This is the smart money's play, retail investors are still debating whether to cut or not. --- As financing costs rise, high leverage positions are going to have issues. The passive liquidation selling pressure will come sooner or later. --- Wait, if the arbitrage chain breaks, will the crypto market on the other side drop straight down? --- I do believe in long-term fundamental screening, but short-term volatility is like stabbing yourself... ETH and SOL probably have a tough time these days. --- Wow, the global capital chain is being pulled by a single thread. It looks complicated. --- By the way, why can this small move by the Bank of Japan have such a big impact? The amount of capital behind it must be terrifying.

View OriginalReply0