The global financial markets have just experienced a landmark turning point. Bank of Japan Governor Kazuo Ueda announced the end of the negative interest rate policy and that rates will continue to rise next year. This news instantly triggered a trading frenzy among global traders last night. But what does this policy shift mean for practitioners and investors in the crypto space? We need to calmly analyze this issue.

Over the past thirty years, there has been a widely used arbitrage logic in international capital markets: using the Japanese yen as a financing tool, leveraging near-zero or even negative borrowing costs, and channeling cheap funds into high-yield global assets. From U.S. Treasuries and stock markets to cryptocurrencies like Bitcoin and Ethereum, much of the market liquidity and price appreciation behind these assets are supported by this "arbitrage chain."

When the Bank of Japan shifts to a tightening policy, this long-standing arbitrage channel begins to narrow. Rising financing costs mean the global funding cost structure is changing, and capital that relied on low-cost yen financing needs to reassess its asset allocation strategies. This is a deep structural change in market rules.

In reality, this policy shift will have three dimensions of impact on the crypto market:

First is the pressure from short-term volatility. When arbitrage funds denominated in yen start to withdraw from global markets, mainstream crypto assets like Bitcoin and Ethereum will inevitably feel the impact of liquidity withdrawal. Historically, every cycle of global liquidity tightening has led to adjustments in the crypto market. Volatility is unavoidable, but this is precisely the market’s self-healing process—bubbles built entirely on leverage and arbitrage will be squeezed out.

Second is the optimization of market structure. The healthy trend of crypto asset prices should be based on genuine demand and fundamentals, not passive inflation from arbitrage funds. Although policy shifts may bring short-term pressure, in the long run, they can eliminate "weak" market participants, leaving a stronger market with more resilient participants and assets. Long-term investors holding quality assets will find better opportunities to build positions during this process.

Third is the opportunity created by the reshaping of the global economic cycle. The policy adjustment by the Bank of Japan marks a new phase in the global tightening cycle. In this new era, the status and value of cryptocurrencies as alternative assets will be reassessed. Institutional investors and mainstream capital are deepening their understanding of the crypto market, and policy certainty may actually attract more regulated capital inflows.

The essence of investing has never been about seeking assets with the least volatility, but about finding value amid volatility. When the global liquidity landscape is being reconstructed, it is often the time when the most profound undervalued assets emerge. For investors confident in cryptocurrencies and willing to hold long-term, this adjustment period may be more valuable than you think.