On Monday's opening, the crypto market delivered a heavy blow to investors. Bitcoin fell below the 85K mark, and Ethereum even failed to hold the 3000 level. Mining stocks and related concept stocks collectively plunged over 10%, turning the positions in hand instantly into the red. Market sentiment froze completely, leaving many people stunned—what about the rate cut positive signals?

In fact, this sharp decline had early signs. There are three underlying issues behind it:

**Yen rate hikes have become a meat grinder for arbitrage funds**

The Bank of Japan signaled a rate hike for the first time in 30 years, with a probability as high as 97%. Looking back at historical records, we know that after the yen hikes, Bitcoin usually drops by 20%-30%. Over the years, global funds have relied on Japan’s low-interest environment to borrow and speculate on cryptocurrencies. Now that costs are rising, funds are forced to cut losses and run. Even more worrying is that Japan may continue to raise interest rates in 2026, and might even sell 550 billion yen worth of ETFs. The pressure on risk assets probably has not yet reached its peak.

**The Federal Reserve’s policy outlook is like looking at flowers in the fog**

Although the Federal Reserve has cut interest rates on time, how many more times can they cut in 2026? No one can say for sure. This week, non-farm payrolls and CPI data will be released. If employment data is too strong or inflation rebounds, the Fed might immediately reverse course. Central banks’ policies around the world are competing with each other, and the covert tightening of liquidity is more damaging to the market than overt tightening policies.