The world's last cheap funding "switch" is finally about to be turned off, and the grand show in the crypto market may only be halfway through.

The Bank of Japan just completed its voting—9 to 0, with no opposition—and raised the policy interest rate from 0.5% directly to 0.75%. This is the highest rate in Japan since 1995 and also marks the official end of a thirty-year "easy money era."

As the last major economy still benefiting from negative interest rates, Japan's move was long anticipated by the market. But the real intrigue begins when the shoe drops—especially for the cryptocurrency market. Before the announcement, Bitcoin experienced intense volatility, dropping below $86,000 at one point, directly triggering over 190,000 liquidations. This is no small matter.

**The Shift Has Arrived**

Under the leadership of Ueda and his team, the Bank of Japan has made a major shift in its policy approach. Previously, they waited for all data to look good before acting; now, they are preemptively acting before risks fully materialize. In other words, the central bank is no longer waiting for perfect conditions but is instead moving early to suppress risks.

This shift is backed by strong confidence. Domestic inflation in Japan is truly heating up: by October, core CPI had risen for 50 consecutive months. The most outrageous figures are in everyday goods—ordinary rice prices surged by 39.6%, while chocolate and coffee beans increased by 36.9% and 53.4%, respectively. This is no longer just numbers; it’s real pressure on people's wallets.

Ueda and his team are very straightforward: "Delaying interest rate hikes will ultimately force a sharp increase." It’s about acting early to prevent fires in the backyard.

**The Invisible Force**

But there is an invisible, massive leverage at play: yen arbitrage trading. For thirty years, countless hedge funds and investment institutions have borrowed in yen—interest rates nearly zero—and then converted to USD, EUR, or other currencies to invest in high-yield assets. How much global liquidity has this supported? No one can count. When interest rates rise, the arbitrage chain tightens, and the era of cheap yen borrowing truly comes to an end.