2025-12-09 16:44:43

In the last month of 2025, the market opened with a flash crash. The Bank of Japan raised interest rates again, and Bitcoin and Ethereum plunged in response. This scenario played out last year as well, and the logic behind it isn't complicated.

The core of the issue is the "yen carry trade" strategy. Japan has maintained ultra-low interest rates for a long time, even negative rates at times—something dictated by their economic situation. As a result, global investors and institutions have been borrowing yen like crazy because the cost is ridiculously low. What do they do with it? They exchange it for US dollars and dive into US stocks, bonds, tech equities, and of course, the crypto market. With such low borrowing costs, any investment can make a profit from the spread.

This cheap yen injected massive liquidity into global risk assets. But once the Bank of Japan raises rates, the rules of the game change. Borrowing costs go up, arbitrage opportunities shrink, and these funds have to quickly repay yen. So what do they sell first?

Of course, it's cryptocurrency. Compared to traditional assets like US stocks, high-yield bonds, and gold, crypto is riskier and more speculative. Institutions will prioritize selling digital assets for US dollars to repay their debts, so coins like Bitcoin naturally crash.

Which coins get hit the hardest? Bitcoin and Ethereum are the first to be affected because they have good liquidity and are easy to cash out quickly—plus, institutional arbitrage positions are most concentrated here. The worst hit are actually the altcoins—poor liquidity, not favored by institutions, and when liquidity pulls out, it triggers a leveraged squeeze and brutal declines.

We probably won't see an altcoin season in this bull run. The end of the bull market is already here, and even signs of an early bear market are emerging. Hold on tight to your stablecoins, trade less and observe more, and wait for opportunities in the bear market. After all, many people get wrecked in bull markets, but the bear market might be where you find a chance for a comeback.

BTC-3.01%

ETH-4.94%

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LiquidatedAgain

· 12-11 18:42

Once again, the Bank of Japan has cleared settlement, this routine really happens once a year. I'm really numb to it. It was the same around this time last year, when the lending rate jumped, institutions immediately dumped their holdings, and altcoins fell the hardest. I was all-in on a bunch of small tokens back then, and I still feel the pain thinking about it now. Honestly hold stablecoins. The feeling that this bull market is coming to an end is definitely here. The bear market is the real opportunity to turn around, and the lessons learned from heavy losses are enough.

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BearMarketBarber

· 12-11 07:53

The yen arbitrage is causing trouble again. This tactic is indeed old; do you still want to step into the same pit after falling last year? Institutions dumping coins to pay off debts—no one can escape this wave. Shanzhai coins are really going to cool off this time. Poor liquidity is a fatal flaw, and leverage pushing it can lead to a bottomless abyss. It's better to sleep with stablecoins. It feels like the end of the bull market is approaching. The bear market is the real time for picking up bargains. Those big players who got wrecked might actually have a chance to turn things around during the bear market. The Bank of Japan just changing interest rates can make the global markets dance. This game rule is truly outrageous. Holding stablecoins is the key. Don’t be scared by short-term fluctuations—opportunities are always reserved for those who can wait.

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ZKProofster

· 12-10 08:23

honestly the yen carry unwinding is just textbook liquidity drain... seen this play out before. institutions always dump crypto first, that's just how the protocol works lol

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GasFeeGazer

· 12-09 17:10

The yen arbitrage wave is here to fleece retail investors again; these institutions really know what they're doing.

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MysteryBoxOpener

· 12-09 17:08

Here we go again with the yen arbitrage play, it's unbelievable. When arbitrage opportunities shrink, institutions have to dump, and our coins naturally take a hit. Altcoins suffer the most—once liquidity is pulled, it triggers a chain reaction. I'm holding stablecoins and watching; the bear market is the real chance to turn things around. People only learn to appreciate after getting rekt in a bull market. With this rate hike by the Bank of Japan, how many dreams have been shattered? Wait, based on this logic, what should we be bottom fishing for? Hold your stablecoins tight, don't let FOMO cloud your judgment. Institutions will dump crypto first, but they’ll definitely come back. It really feels like this cycle is almost over—all the signals are here.

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MEV_Whisperer

· 12-09 17:04

Yen arbitrage is back for another round; last year's script is still playing out this year... Looks like the bull market story won't last much longer.

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SpeakWithHatOn

· 12-09 17:03

It’s the yen arbitrage play again, always the same trick... --- Whenever the Bank of Japan makes a move, the whole world shakes, and we’re the ones who take the hit. It’s unbelievable. --- Holding stablecoins is the way to go. Anyone entering the market now is a true warrior. --- This round might really be the end for altcoins. When liquidity dries up, it’s a death spiral. --- I said it was the end of the bull market a while ago. If you’re only realizing it now, it’s already too late. --- The bear market is when you should be buying the dip. I’m just waiting. --- Institutions always dump our coins first when they exit. That logic never fails. --- Another feast of retail slaughter is about to begin. Buckle up, everyone. --- Just sit back and watch the show. Don’t mess around with your real money. --- Hold on tight to your stablecoins, and don’t listen to those pump callers.

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SlowLearnerWang

· 12-09 17:03

Here we go again, I heard about yen arbitrage last year, but now I finally get it... I’m always a step behind. Holding stablecoins is the way to go, since the altcoin season is completely over. Rather than messing around, it’s better to wait for the bear market to pick up bargains.

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PhantomMiner

· 12-09 16:52

The logic behind yen arbitrage is always the same; institutions are just thinking about how to take advantage of retail investors. It's a bit late to realize this now.

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