This week's market has been a bit crazy—right after the rate cut news, Bitcoin suddenly plunged, directly hitting the 85k level. Ethereum couldn't even hold above 3000, and mining stocks and concept stocks collectively dropped over 10%. In just two days into the week, many people's accounts are already in a shocking green.

What exactly happened? It seems to be not just one or two reasons, but several forces acting simultaneously.

**The End of Yen Arbitrage**

The Bank of Japan has been holding back for 30 years, and it looks like they are about to start raising interest rates (the probability is as high as 97%). There is a historical pattern behind this: once Japan raises rates, BTC usually falls by 20%-30%. Why? Because global investors previously borrowed cheaply in yen to speculate wildly on crypto assets. Now, with rising interest rates, borrowing costs soar, forcing them to cut losses and liquidate. Even more frightening is that Japan may continue to raise rates in 2026 and sell off 550 billion yen worth of ETFs. This puts pressure on all risk assets.

**Fuzzy Expectations for the Federal Reserve's Policy**

Rates have been cut, but what’s next? How many more cuts in 2026? No one knows for sure. Once the non-farm payroll and CPI data are released this week, if employment figures are poor or inflation rebounds, the Fed’s stance will change immediately. Central banks around the world are tightening liquidity behind the scenes—this "invisible tightening" is harder to deal with than explicit rate hikes.

**Large On-Chain Funds Are Exiting**

Xinjiang mining farms shut down over 400,000 machines overnight this week, causing the network hash rate to drop by 17%. Miners have no other options; without selling, there’s no cash flow. Large on-chain whales are also selling off, with ETF outflows reaching $350 million in a single day. Holders during US trading hours are suffering especially badly—losses are more than 40% deeper than during Asian trading hours.

**Counting These Factors**

Yen arbitrage funds retreating + weakening liquidity expectations + miners and large holders collectively liquidating = this wave of decline isn’t undeserved.

**What to Watch Next?**

The 85k level is a critical threshold. If the Bank of Japan slows down its rate hikes or US data isn’t as bad as expected, there’s still a chance for a rebound. Otherwise, 80k might be tested. But the crypto market always loves to surprise, so buckle up, prepare some tea, and stay tuned—this story is still unfolding.