Recently, the trending topics are all about the impact of Japan's interest rate hike on crypto assets. Scrolling through the feed, you're flooded with various predictions like "Japan raises rates on Thursday, ETH and SOL will drop," and some even cite historical data showing a 30% decline during previous rate hikes to argue that "Bitcoin will break down." Many new traders are scared stiff and overnight ask whether they should liquidate their positions to cut losses.

But in reality, most of these concerns are overreactions. Having navigated the crypto markets for years, I’ve seen countless so-called "apocalyptic scenarios." Objectively speaking, Japan’s rate hike is just another market event that’s been overinterpreted—what’s truly panicking are the newcomers; veteran traders have already been planning to scoop up bargains.

First, understand a basic logic: why would Japan’s rate hike impact the crypto market?

Simply put, Japan’s interest rate environment has been extremely accommodative for years, with borrowing costs in yen nearly free. This creates an excellent arbitrage opportunity: borrow low-interest yen, convert it into other currencies or crypto assets, and earn the interest rate differential. This strategy is especially common during market downturns because hedging risks costs very little.

Currently, Japan’s central bank plans to raise rates around mid-December, expected by most to increase by 25 basis points, bringing the benchmark rate to 0.75%. As borrowing costs rise and the yen faces upward pressure, arbitrage funds will inevitably sell assets to repay debts. This is the root cause of the most intense bearish voices in the market.

Does this logic sound convincing? But that’s only surface-level. The real situation is much more complex.

The market has already priced in this rate hike. Data shows that the market has already assigned a 98% probability to this increase. In other words, almost all participants already knew it was coming. Under these circumstances, the actual rate hike date might even become a "sell the news" event—because expectations have been fully baked in, and real events often fail to surpass expectations.

We need to understand a fundamental market principle: crypto markets are most afraid not of expected risks, but of black swan events that strike unexpectedly. A rate hike widely discussed and fully priced in a month ago usually has a much smaller impact than people imagine.

Another reality is that the market structure of crypto assets has changed significantly in recent years. The entry of institutional investors and spot ETFs has altered market fragility. Compared to a few years ago, when the market could break with a single poke, today’s resilience is much stronger. Core assets like SOL and ETH now have solid fundamentals backing them, no longer purely speculative.

The scale of arbitrage funds also needs to be reassessed. While yen arbitrage was popular in the past, after several regulatory adjustments and market lessons, the scale of such leveraged operations has shrunk considerably. It’s no longer like a few years ago, when a policy signal could trigger a chain reaction.

Finally, and most importantly: excessive market pessimism itself is a buy signal. When newcomers are panic-selling while seasoned players are accumulating, history often favors the latter. Volatility before and after rate hikes? Completely normal. But using this as a reason to be utterly bearish on the future market? That’s a classic case of being misled by short-term fluctuations.

Overall, instead of being overwhelmed by the flood of panic voices, it’s better to calmly assess how big the actual risks are. Japan’s rate hike isn’t a black swan; it’s a white swan—something everyone can see. What truly can change the market’s direction are the unforeseen variables. In this sensitive window around the rate hike, staying clear-headed may be more important than any aggressive move.