Anyone keeping an eye on the market this morning probably felt their heart skip a beat, right?

ETH led the dive, dropping nearly 0.7%. BTC couldn’t hold up either, and the liquidation leaderboard was flashing numbers like crazy. Community chats are already soul-searching: Is this bull run over?

I don’t think there’s a need to panic, but it definitely caught everyone off guard.

The source of this blow was a bit unexpected—not Wall Street antics, nor some sudden policy move from a major country, but straight out of Tokyo.

At 7AM today, the Bank of Japan suddenly announced a rate hike. A lot of people might not care about this, but it’s like the global liquidity tap just got tightened halfway.

For the past decade or so, borrowing costs in Japan have been almost zero. Speculative capital worldwide would borrow yen, swap it for dollars or euros, then turn around and pour into US stocks, bottom-fish Bitcoin, or go all-in on high-risk assets. This is the classic “yen carry trade”—the invisible engine of the global liquidity party.

But now? Japan, the last source of “cheap money,” is starting to tighten up, and the consequences are immediate: The cost of borrowing yen just went up, so the first move for those highly leveraged players is to quickly close positions and get some cash back.

Look at the timeline—the crypto flash crash happened almost simultaneously with the Tokyo policy announcement. That’s no coincidence.

Bitcoin and Ethereum, as the most liquid and volatile risk assets globally, naturally became the first “emergency ATMs” to get sold off.

Whenever the market gets chaotic, all sorts of rumors start flying. Let me filter out the noise for you:

Some say “major negative news from China”? That’s old news from the weekend—the market already digested it long ago. It doesn’t explain today’s plunge at all.

The real logic is simple: The macro liquidity tap just got tightened, and the crypto market, as a high-beta asset, was the first to take the hit.