$BTC
#比特币VS代币化黄金 Some friends may ask: Why is Japan's interest rate hike an important matter? It's actually related to the yen being a lifeblood package in the global market. Japan has maintained low interest rates for many years, but the interest rates in some major markets in Europe and America are still relatively high, leading to a significant interest rate differential, which creates an arbitrage opportunity. Many funds have gone to Japan to borrow money and invest worldwide.
However, now with Japan's interest rates continuously rising while the United States is in a rate-cutting cycle, the interest rate differential between the two is narrowing. For example, if the U.S. lowers rates by 25 basis points in December and Japan raises rates by 25 basis points, the interest rate differential shrinks by 50 basis points, not to mention the existing exchange rate fluctuations.
Now not only will new arbitrage funds decrease, but the arbitrage funds that have already borrowed yen for investment may also flow back to Japan, thus reducing market liquidity. Last year, Japan's interest rate hike also caused short-term drastic fluctuations in the market. However, regardless of how things unfold, the Federal Reserve's rate cuts, stopping balance sheet reduction, and the potential for balance sheet expansion can all increase liquidity.
So, there's no need to panic just yet, but it is still important to keep an eye on the situation regarding Japan's interest rate hikes.