What is the actual relationship between the Yen rate hike and the decline of BTC? The story behind it is actually quite interesting.

Long story short, Japan's interest rates have been hovering near zero for many years, which means borrowing Yen is basically free. With such a good deal, can global hedge funds and asset management institutions ignore it? Of course not. So everyone is playing an old trick: borrowing大量 Yen, then converting to USD to do various investments, including US bonds, US stocks, and cryptocurrencies. This strategy has been around for at least decades, with an asset scale conservatively estimated to be in the hundreds of billions of dollars.

Now the question is: once the Yen starts to raise interest rates, the cost of borrowing Yen goes up. Fund managers will definitely need to act, selling their assets to pay back Yen loans. What will they sell first? Naturally, the riskiest assets with the most volatile returns—yes, cryptocurrencies. So BTC drops, Ethereum drops, and other coins also fall; all are the result of the same logic.

But to be honest, the main reason for the recent turmoil isn't just the rate hike. The market already sensed the wind at the beginning of the month, knowing the Yen was about to move (this expectation was already reflected in the price). By the 4th and 5th, the decline was already nearly complete. Now that the news has officially materialized, the big drop has already passed. So if you see prices still falling now, there might be other reasons.