$BTC $ETH $The Bank of Japan is about to hold its final policy meeting of the year, and the market widely expects the benchmark interest rate to be raised from 0.5% to 0.75%. This is the fourth rate hike in Japan this year, but historical data shows that after each rate increase, the cryptocurrency prices have fallen sharply—23% in March, 26% in July, and 31% in January. Interestingly, the market tends to rebound within 72 hours after the rate hike is implemented.

Why is that? Essentially, it's the old trick of "yen arbitrage." Before the rate hike, investors sell off high-risk assets to pay off yen-denominated debt, causing panic. Once the bad news is out and the negative sentiment has been exhausted, some money flows back into the crypto market, and the short-term rally is restored. But does this mean the bear market is over? Absolutely not.

Although the Federal Reserve has cut interest rates three times to 4.25%-4.5%, rates remain high. The real yield on 10-year US Treasury bonds stands at 4.8%. In comparison, the story of "high yields" in crypto assets appears pale and powerless. More painfully, at the beginning of the year, the market drove BTC up to $125,000 due to expectations of rate cuts. But after the actual rate cuts started, institutions sold even faster, with the BlackRock IBIT ETF experiencing net outflows of over $2.1 billion for four consecutive weeks. This pattern appeared during the 2019 rate-cut cycle—after the first cut, the bear market continued for another six months.

Therefore, this time Japan's rate hike will likely lead to a 15%-20% rebound in BTC and ETH before the 22nd, but don't be fooled by the hype. Liquidity replenishment in a bear market is always an illusion; heavy long positions will only repeat the fate of those whales—like the order that lost $3.24 million in 14 hours on December 11, still vivid in memory.