The stock market just stabilized a few days ago, and today there's a new wave of concern—Japan is going to raise interest rates, arbitrage funds will withdraw, and a financial crisis is coming! It sounds pretty scary, but upon closer inspection of the news, you'll find that the Bank of Japan plans to gradually reduce its ETF holdings, selling over 112 years, at only $5.2 billion per year. With such a small liquidity volume, can it really shake the global markets?

Japan's interest rate policy in recent years has been quite "cautious." Starting from negative interest rates, they hesitated before raising to 0.5%, and on the 19th of this month, it might go up to 0.75%. The pace doesn't seem fast? But you need to understand why Japan has maintained zero interest rates for 16 years—because the deflation trap is too deep, and ordinary people prefer saving money over spending, making the economy almost "zen-like." So this rate hike is more of a cautious probe than an aggressive move.

Why shouldn't we over-worry about this wave? There are three key points:

**The interest rate differential still exists.** Japan raising to 0.75%, while the US interest rate remains above 3.75%, creates a spread of over 3%. After deducting costs, the arbitrage space is still over 2.5%. Now, the annualized yield of stablecoins can reach 5%-6%. With such returns in front of us, will large funds really rush to withdraw just because of a rate hike?

**The remaining players are all "veterans."** Japan has already raised rates four times. If they were truly afraid of risk, they would have run away after the first rate hike (from negative to 0). Funds that have persisted until now already have the capacity to withstand volatility. The size of the global market simply doesn't lack this part of the money.

**The scale isn't as terrifying as you think.** Some institutions estimate Japan's arbitrage fund size at around $2 trillion. It sounds like a lot, but in the context of the global market...