The Bank of Japan has taken action. On December 19, the BOJ raised its policy interest rate to 0.75%, reaching a nearly thirty-year high. What does this mean? It signifies that the era of cheap yen supporting global high-risk assets is officially counting down.

Over the past thirty years, Japan's ultra-loose monetary policy has been a treasure trove. How many arbitrageurs borrowed cheap yen and then invested in US stocks, emerging markets, and cryptocurrencies? This model has fueled countless bubbles, but no one can say for sure. Now, borrowing costs are soaring, and the game has changed.

The BOJ's rate hike is not a sudden whim. Since ending negative interest rates in March 2024, the BOJ has been signaling tightening step by step. An unexpected rate hike in July, raising to 0.5% in January, and now to 0.75%, all follow a clear path. According to data from the prediction platform Polymarket, the market has long priced in a 97% probability of a rate hike by the BOJ. The market has already digested this expectation, so this rate increase may not cause a direct sell-off.

But the real uncertainty comes from the Federal Reserve. In September, US non-farm payroll data far exceeded expectations, and market bets on a rate cut in December have been shattered. The reality now on the table is: monetary policies in Japan and the US are diverging. One is tightening, while the other is hesitating. The structural divergence in global liquidity has become a certainty.

For the crypto market, this is a crossroads. Assets like ETH and Bitcoin, which have long benefited from cheap liquidity, now face a new question: will the cost for those borrowing yen to buy crypto rise, and can their yields keep up? The next three months will reveal the true answer.