Last night’s market crash caught many people off guard, but the real storm may still be ahead.

According to market sources, the Bank of Japan is likely to announce a 25 basis point rate hike at its monetary policy meeting on December 19, pushing the policy rate up to 0.75%—the highest level since 1995. Don’t underestimate this move; the chain reaction it triggers could be far more intense than people imagine.

With the rise in yen interest rates, the yen exchange rate is bound to strengthen. Here’s the issue: a large amount of global capital has been engaging in the carry trade—borrowing low-interest yen, converting it into US dollars or other currencies, and pouring it into risk assets to profit from volatility. The previous rallies in crypto assets like BTC and ETH have largely been driven by these carry trade funds.

Now that the cost of yen financing is rising and the arbitrage spread is shrinking, these funds are being forced to withdraw. What’s even worse is that once large-scale unwinding starts, market liquidity will tighten instantly, and volatility will be amplified like a row of dominoes. Those high-leverage players might get liquidated before they even have time to react.

At this point, the safest approach is to reduce leverage, set stop-loss levels in advance, and don’t fantasize about weathering the storm. The market won’t reason with you—it will use real money to teach you that “survival is more important than anything else.”