Bitcoin plummeted from over $90,000 directly to $85,000, and many people think it's the policy suppression at work. Wake up, that kind of meeting rhetoric has long lost its effectiveness; the real bomb was quietly detonated on the other side of the Pacific - the Bank of Japan.

Their ten-year government bond yield soared to 1.1%, a figure not seen since the 2008 financial crisis. Sound like nothing? Then you need to understand a game rule first.

In the past decade, the Bank of Japan has been like a zero-interest pawn shop, with global institutions frantically borrowing yen, this "cheap currency", and exchanging it for dollars to invest everywhere - buying U.S. Treasury bonds to enjoy interest rate differentials, trading stocks in pursuit of trends, and conveniently allocating some crypto assets. This practice has a professional term: yen arbitrage trading. A lot of hot money in the crypto circle came in this way.

Now the plot has reversed. Japan's inflation cannot be contained, and the Central Bank is tightening the taps. The costs have suddenly surged, the arbitrage space has been compressed, and what's worse is that the yen may appreciate — the money borrowed will incur losses when exchanged back due to the exchange rate.

Institutions are panicking and starting to sell assets to exchange for yen to pay off debts. Bitcoin has the best liquidity, so it naturally became the first target to be smashed. Is anyone hoping for the Federal Reserve to cut interest rates to save the situation? Don't be naive; that's at most just applying a bit of Yunnan Baiyao to the wound, while over in Japan, they're directly drawing blood. Even if they do cut rates, the arbitrage space has already been squeezed out by Japan.

There are two key dates in December to keep a close eye on: the 10th to see whether the Federal Reserve will cut interest rates, and the 19th to see if Japan will raise interest rates. Right now, keep an eye on the USD/JPY exchange rate and the trend of Japanese government bond yields; these two macro variables are more useful than any technical indicators.

The market is still spinning in the meat grinder, don't rush to catch the falling knife. It's better to avoid the storm first, and it's not too late to take action after the results of this macro game are out.