Look at how the Japanese Yen against the US dollar, euro, and gold have all hit record lows recently. This is not a normal market signal. Such a situation is hardly visible in a stable financial environment.

Japan is the most critical domino in the entire chain. When the Yen continues to depreciate, the biggest impact is on the largest transaction globally—carry trade. Once this mechanism is squeezed, the market will quickly enter a liquidation mode.

The data is clear: Japan holds about $1.2 trillion in US Treasuries. When the Yen plunges, Japanese funds usually react immediately—reclaim risk exposure, increase hedging strategies, and sell foreign exchange assets to reduce risk exposure. As a result, the selling pressure on US Treasuries will rise, pushing up US interest rates.

Rising interest rates may seem harmless, but the consequences are severe. Borrowing costs increase, liquidity begins to tighten, and risk assets come under pressure. The entire chain unfolds as follows: rising funding costs → refinancing becomes more expensive → tightening loan conditions → leverage is cleared → risk assets start to adjust. Short-term charts may look decent, but once triggered, it’s very hard to control.

History shows us that the sequence is always like this: bonds move first → stocks follow → cryptocurrencies fluctuate significantly first. This transmission chain remains valid through 2026.

Most people spend all day watching candlestick charts, but the real early warning signal is actually the Yen. It is the earliest indicator to respond to changes in global liquidity. Don’t ignore it.