The latest round of rate hikes by the Bank of Japan has pushed the policy interest rate up to 0.75%, which is seen by the market as an important signal of the normalization of global monetary policy. However, there is a bit of irony—while rate hikes usually strengthen the domestic currency, the yen has been depreciating in the opposite direction.

Where is the problem? The market's logic is straightforward: domestic inflationary pressures in Japan still exist, and interest rates in the US remain high. As a result, the attractiveness of Japanese interest rates is discounted, leading to reverse arbitrage flows, and the yen is consequently dragged down in value.

On a broader scale, this reflects a new trend in global capital flows. The Federal Reserve's policy stance remains the strongest magnet worldwide, and the actions of central banks in other countries are constrained by the invisible hand of US policy. If Japan and Europe cannot keep pace with the US in raising interest rates, capital will naturally flow toward the US dollar.

For the crypto market, 2026 will be very interesting. On one hand, the growth momentum of the Asia-Pacific tech sector may continue, but the crypto space faces many uncertainties. Unclear macro policy directions, geopolitical risks, and regulatory expectations—all these factors will influence the market. Ultimately, the tightening trend of global liquidity, including the Fed's next policy moves, is likely to be a key factor in determining the performance of crypto assets.