The recent Bank of Japan rate hike decision has triggered a chain reaction in the market. The benchmark interest rate was pushed up to 0.75%, the highest level since 1995. What seems like just a 25 basis point technical adjustment marks the turning point of an era—the arbitrage model relying on borrowing nearly zero-cost yen for global asset allocation is officially counting down.

Why does the central bank have to act so urgently? The reason is straightforward. Japan's inflation has exceeded the 2% target for four consecutive years, with prices continuing to rise. But the harsh reality is that the average worker's real wages have actually fallen for ten months, and economic data shows no signs of improvement. The central bank is caught in a dilemma: to let inflation continue to erode purchasing power or to raise interest rates aggressively to impact the already fragile economy. Ultimately, they chose the former.

What chain reactions might this policy shift trigger? Several key points are worth noting:

First, the underlying logic of global arbitrage trading has been broken. Over the past few decades, cheap yen has been the best financing tool in capital markets. Borrowing yen to buy US stocks, gold, or crypto assets—this model has supported countless hedge funds. Now, with interest rates rising, this "perpetual motion machine" will gradually fail.

Second, Japan's massive holdings of US Treasuries may trigger capital repatriation. When domestic interest rates become more attractive, the marginal returns on overseas investments decline. This will push up global borrowing costs and exert pressure on all risk assets.

Third, the cryptocurrency market will feel the impact directly. One of the fuels for this bull market has been abundant global liquidity. As the easing cycle recedes, assets that rely on low interest rates need to be re-priced. There may be a technical rebound in the short term, but this is just inertia—the real stress test has only just begun.

Market reactions also confirm this. The yen did not strengthen as expected; instead, the crypto market rebounded after being oversold. But is this a sign of "bad news fully priced in," or a false calm before the storm? It's hard to say. The key point is to recognize that the old low-interest-rate order is collapsing, and a new risk pricing system is still in the process of being explored.