Yesterday, the US stock market plunged, and BTC was dragged down as well. But upon closer inspection of the market, there doesn't seem to be any particularly obvious bad news supporting the decline.

This week's market focus revolves around three main events: US non-farm employment data, inflation reports, and the Bank of Japan's interest rate decision.

Some are worried that Japan's rate hike could trigger a market crash, but it depends on the timing.

In the short term, there will definitely be an impact. Once the rate hike news is announced, market sentiment will tighten, liquidity will shrink, and investors will be more cautious. But a significant drop? The likelihood is low.

The long-term logic is the decisive factor—the attitude of the Federal Reserve. Global liquidity is ultimately dominated by US monetary policy; other central banks are just supporting roles.

Looking at Japan's recent rate hike history makes this clear: ending negative interest rates in March 2024, raising to 0.25% in July, and then increasing to 0.5% in January this year. This time, it’s very likely to push up to 0.75%. During the first three rate hikes, BTC showed little movement, with no obvious corrections in the following one or two months.

Why is that? Because BTC is too small within the entire global financial system. An increase in the yen interest rate might force some leveraged traders relying on borrowing yen to liquidate their positions, but the impact is limited.

Therefore, the market has already priced in this round of Japanese rate hikes, and the shock shouldn't be too intense. However, two scenarios need to be watched:

One is Japan being forced to accelerate its rate hikes. For example, if the yen depreciates unexpectedly or inflation suddenly surges, the central bank might have to continue aggressive rate increases.

The other, more dangerous scenario, is a combined attack: Japan hikes rates while the Federal Reserve also begins to tighten. That would be a serious problem.

The core logic is simple: as long as the Federal Reserve remains dovish, Japan alone cannot shake the global financial markets.