Ladies and gentlemen, I need to discuss with you the matter of Japanese yen rate hikes and US dollar rate cuts. On the surface, both are adjustments in central bank policies, but behind the scenes, they conceal a major storm in the global financial markets.

Many people naturally assume that a US dollar rate cut has the greatest impact, but this is not necessarily true. If the Bank of Japan were to truly raise interest rates, the shock to the global financial markets could be even more intense. Why? Because the yen has an invisible identity — the "King of Lending Currency."

For the past 35 years, Japan has maintained near-zero interest rates. What does this mean? It means borrowing yen is almost cost-free. This business is incredibly lucrative. Some borrow cheap yen and then exchange it for US dollars or other strong currencies to invest — buying Wall Street stocks, Nvidia, currencies of major exchanges, or even participating in large mergers and acquisitions.

Looking at it from another angle: Suppose you hold 100 yen from 1990 to 2025; it remains 100 yen. But what about 100 USD? Due to compound interest, wealth can grow like a rocket. Smart investors see this opportunity: borrow yen → exchange for USD → invest in high-yield assets → profit from arbitrage. This involves astronomical amounts of capital in the financial circle, with 1 billion or 10 billion dollars just the beginning.

Yen also has another hidden advantage — long-term exchange rate stability. This makes arbitrage more stable and controllable. But once the Bank of Japan raises interest rates, this "free lunch" will disappear. At that time, this cross-currency arbitrage chain will quickly disintegrate, and large amounts of capital will be forced to close positions and flow back.

What about the crypto market? This sharp contraction in global liquidity will directly impact the prices of assets like BTC, ETH, and others. The Federal Reserve's rate cuts might ease the pressure, but the impact of Japanese yen rate hikes could completely overshadow it. Looking now, the fuse for global financial risk might not be in the US, but in Japan.