The Bank of Japan's interest rate meeting on December 18-19 has just concluded, and they directly raised the benchmark rate from 0.5% to 0.75%. What's more aggressive is that the official roadmap clearly states there will be further rate hikes in June 2026, January 2027, and July 2027. This is not a routine move, but a rare long-term tightening signal.

The chain reaction of liquidity tightening has already begun to show. Crypto assets are essentially a high-risk liquidity game. Remember the last Fed rate hike cycle? BTC was slashed from $60,000 to $16,000, and the entire market was in turmoil. Now, the impact of yen rate hikes could be even more insidious: a large amount of carry trades (borrowing low-interest yen to invest in high-yield assets) may be forced to close due to currency reversals, and this capital could exit faster than expected.

On-chain indicators warrant caution. Current exchange leverage ratios remain high, and long positions dominate, but macro environment turning points often first explode in the derivatives market. Once yen appreciation pressure transmits into the global risk asset pricing system, high-leverage positions could face systemic liquidations—it's not a question of if, but when.

Even more crucial is the expectations game. The market usually prices in policy changes 3-6 months in advance. The hawkish tone of the December meeting means that funds could accelerate their outflows from the crypto market in the coming weeks. Even US equities will be impacted, let alone crypto, where volatility is several times that of traditional markets.

It's advisable to reduce leverage exposure and reassess portfolio allocations. In a long-term tightening cycle, cash flow and liquidity management are more important than betting on a rebound. Don’t wait for a liquidation notice to start thinking about risk control—when the macro cycle shifts, wishful thinking is often the most expensive cost.