The Governor of the Bank of Japan, Kazuo Ueda, casually mentioned that "a rate hike may be discussed in December," directly waking up the global capital market from its laid-back state.

In just two weeks, the probability of a rate hike surged from 30% to 60%, and now it has even touched 80%. This pace is so fast that it's hard to react.

Why does the whole world shake when Japan raises interest rates?

The answer is simple – for the past decade or so, Japan has been the "free ATM" for global capital. The nearly zero-interest yen has been borrowed by numerous institutions, leveraged, and poured into U.S. stocks, gold, bonds, and of course, also includes BTC and ETH.

This set of gameplay has a professional term: yen carry trade.

But now the question arises. Once Japan truly raises interest rates, the funds that are leveraged in yen will have to rush to do two things: sell assets for cash, and then pay back the yen.

Once this collective retreat begins, it triggers a stampede-like chain reaction. History has proven that the destructive power is no joke.

The market has already begun to react in advance.

The yield on Japan's two-year government bonds surged to its highest level since 2008.
The Japanese yen directly pulled to 155.4 against the US dollar;
Global arbitrage funds are quietly retreating.

The more magical thing is——

Japan is signaling an interest rate hike while planning to issue 6.3 trillion yen in government bonds to stimulate the economy. It's like stepping on the brake with one foot and the accelerator with the other, leaving the market completely bewildered.

Adding insult to injury is the Federal Reserve over there. The expectation for interest rate cuts in December continues to heat up.

What if the U.S. lowers interest rates and Japan raises interest rates on the same day? That would be the ultimate liquidation moment for Carry Trade - a surge in the yen, a crash in risk assets, and liquidity being directly torn apart.

Many people still feel that it has nothing to do with them.

To be honest, the more it gets to this kind of time, the less you should move your positions. Reduce the unstable ones first, lower the leverage for the aggressive ones, and don't bet on the direction before the trend is clear.

Take action now, it's not too late. Don't wait until you become the last one to take the fall.