The interest rate hike by the Japanese yen is not just a small move by the Bank of Japan. It involves the larger game of global liquidity— the interest rate differential and exchange rate fluctuations between the US dollar and the yen directly determine the fate of risk assets like Bitcoin.

In the past decade, the Japanese yen has almost zero interest rates, making it the most useful financing tool in the world. Investors are frantically borrowing low-interest yen, converting it into dollars to buy high-yield assets, and naturally, Bitcoin is also part of this arbitrage chain. This game can continue to be played, relying on the stable interest rate differential and exchange rate between the US and Japan.

But what happens once the Bank of Japan starts raising interest rates? The expectation of yen appreciation immediately emerges, the profit margin for arbitrage trading is compressed, and it may even trigger a wave of liquidations. Traders have no choice but to sell assets like Bitcoin to exchange for yen to pay off debts, resulting in a natural bloodbath in the market. This is the truth behind the plunge.

Hayes's view goes further. He believes that the liquidity crisis triggered by the collapse of yen arbitrage trading will force global central banks—especially the Federal Reserve—to take emergency measures. For example, providing the Bank of Japan with dollar liquidity through currency swaps, which is essentially a form of implicit monetary easing and dollar depreciation.

Short-term tightening may cause some pain in the market, but to stabilize the global financial system, the Central Bank will ultimately open the liquidity floodgates. Once the new round of liquidity is injected, all assets will soar, and Bitcoin reaching 1 million, or even 1.3 million dollars, is not a pipe dream.

Hayes himself admits that the accuracy of these macro predictions is only 25%. But what he wants to say is: as long as we grasp the core logic of the long-term depreciation of fiat currencies and the continuous demand for hedging, long-term allocation will not go wrong.

The fluctuations in the crypto market often hide in these seemingly distant macro variables. The Japanese yen's interest rate hike is just the beginning; the subsequent chain reactions are what truly deserve attention.