An analysis of the yen interest rate hike from a different perspective.

The logic of retail investors and the actual logic: why did Bitcoin fall first and then soar, leaving retail investors far behind? Everyone only saw the short-term crash caused by the yen interest rate hike, but did not see the crazy rise after the short-term drop. Retail investors will be driven by market sentiment, leading to panic selling and cutting losses. Clearly, they already knew about the interest rate hike, yet they had to wait until the moment of the hike to follow the trend and sell?

This time, Japan's interest rate hike will lead to a drop, but it will not be as crazy as before. Moreover, after a drop, there will be a crazy rise.

One reason is that it has already dropped in advance, and the market has already priced it in. This time, Bitcoin's drop has reached an extreme reduction in volume, indicating a reluctance to sell. The manipulators only need to push down to ignite the beginning of the drop, and then just wait for retail investors to trample each other and hand over their chips to buy at the bottom.

Please remember, the process of falling is a process of the manipulators selling and buying at the bottom, not a process where the manipulators are pushing the chips down to give them to everyone. The low price is created by retail investors cycling and exchanging chips among themselves. This is how the manipulators operate: first push out A chips, retail investors follow and sell, buying A chips, retail investors buy a small amount at the bottom, the manipulators continue to push out A chips, retail investors panic sell, the manipulators buy B chips… and so on, in the end, the chips remaining with the manipulators will be far greater than the initial A chips they started with. The chips remaining with retail investors will be less than what they initially held. Because after the panic selling, most retail investors are afraid to buy, while the manipulators are just the opposite.

From a second perspective, everyone should have not carefully considered whether Japan's interest rate hike to 0.75% will lead to a cliff-like liquidity withdrawal? Let me give a simple example: when the yen interest rate rises and the dollar interest rate falls, does it mean the yen rises and the dollar falls? Does it mean that the same 100 dollars that could originally be exchanged for 15500 yen may now only exchange for 14000 yen? At that time, you borrowed 15500 yen from the Bank of Japan, and now you need 15500/14000*100=110.7142857 dollars to pay it back. Is it appropriate to repay the Japanese loan now? The interest is a bit higher, but you will have to pay more dollars. You only consider the bank interest, but do you not take the exchange rate into account?

It is not that the yen interest rate hike will lead to a global liquidity withdrawal, but that the expectation of a strong yen and a simultaneous expectation of a falling dollar will lead to a withdrawal. Therefore, the upcoming hawkish statements from Japan are the real culprits.