The whole world is betting on the Federal Reserve's rate cut, but the real eye of the storm has quietly formed in Tokyo.
While all investors are focused on the Federal Reserve's interest rate decision tonight, I have to pour a bucket of cold water on everyone: these expectations have already been overdrawn. Bitcoin has risen from 80000 to 94000 dollars, completely following the logic of rate cut expectations.
But the real core plot is next week - the Bank of Japan may end the era of negative interest rates, which will be a significant turning point for global liquidity.
01 The Forgotten Historical Lessons
The market seems to have collectively lost its memory, forgetting the financial storm that swept Asia in 1998. At that time, Japan ended its zero-interest-rate policy, which directly led to the draining of the Asian financial system. Thailand and Indonesia collapsed, and South Korea was on the brink of bankruptcy.
Although the Federal Reserve symbolically cut rates by 25 basis points at that time, when the yen surged in early October, U.S. tech stocks still suffered a flash crash. Ultimately, the Fed was forced to urgently cut rates by 75 basis points to stabilize the market.
History does not repeat itself simply, but it is always remarkably similar. The current market conditions have many similarities to that time: global capital is still heavily reliant on yen carry trades, and once yen rates reverse, everyone will have to reassess their positions.
02 The global impact mechanism of yen rate hikes.
Why is a rate hike by the yen more important than a rate cut by the Federal Reserve? The answer lies in the mechanics of global carry trades.
In simple terms, global capital is 'borrowing yen and buying U.S. Treasuries.' Investors borrow yen at nearly zero cost and then exchange it for dollars to purchase U.S. government bonds or other high-yield assets, profiting from the interest rate differential.
Once the Bank of Japan raises rates, it will directly increase the financing costs of the yen and simultaneously trigger expectations of yen appreciation. This will create a double squeeze: shrinking interest rate differentials + exchange rate losses, forcing carry traders to close their positions.
What does this mean? Investors will need to sell U.S. Treasuries in large amounts to buy back yen to repay debts, which will push up U.S. Treasury yields, thereby dragging down tech stocks, cryptocurrencies, and other risk assets.
03 The current market is already showing signs of fatigue.
Let's look at the latest data: Bitcoin has encountered strong resistance around $94,000, with multiple unsuccessful attempts to break through. Although the market generally expects the Fed to cut rates by 25 basis points tonight, this expectation has already been fully priced in, and the marginal impact is weakening.
The key turning point is next week: the Bank of Japan's interest rate meeting + U.S. CPI data. If CPI surprises with a spike, the market will face a double blow of 'high inflation + yen withdrawal,' and volatility may break through the charts.
The high leverage in the cryptocurrency market exacerbates this risk. In the past 24 hours, the total liquidated amount of cryptocurrency contracts has reached hundreds of millions of dollars, indicating extreme market vulnerability.
04 Market trends under two scenarios.
In the face of tonight's Fed decision, two scenarios may emerge in the market:
Dovish rate cuts: If Powell clearly signals a sustained rate cut, risk assets may rebound in the short term, and Bitcoin may challenge the $95,000-$100,000 mark. However, this rebound may be an opportunity to reduce positions.
Hawkish rate cuts: If the Fed emphasizes its determination to combat inflation and hints at a pause in the rate-cutting cycle, while next week the Bank of Japan also decides to raise rates, the liquidity squeeze will truly hit hard.
I personally lean towards the second scenario. The Federal Reserve currently faces inflation resilience (September PCE year-on-year still at 2.79%), while the scale of government debt is massive, limiting the space for rate cuts. The Bank of Japan has already recognized that it must seize the window of opportunity to normalize policies as the Fed shifts.
Bitcoin leveraged long positions need to be particularly cautious. Market direction will no longer be determined by a single central bank but will depend on the outcome of the policy tug-of-war between the Federal Reserve and the Bank of Japan. When everyone is cheering for the Fed's rate cut next time, the real capital is quietly positioning itself to deal with the liquidity changes brought about by the yen rate hike.
When the tide of liquidity recedes, we will find out who has been swimming naked. And the direction of the tide may be changing from Tokyo. Follow Ake to learn more about first-hand information and cryptocurrency knowledge, precise points, and become your guide in the crypto world; learning is your greatest wealth!#加密市场反弹 #加密市场观察 $ETH
