The last remaining liquidity gap worldwide is narrowing. Japan's contradictory signals are stirring the entire market.

On December 1st, traders in Tokyo were collectively stunned. A speech by the Bank of Japan Governor caused the Nikkei Index to plunge nearly a thousand points in one day. At the same time, the Japanese Ministry of Finance dropped an even more explosive piece of news — this heavily indebted country announced that it might achieve a budget surplus for the first time in the 2026 fiscal year, the first time in 28 years.

The market instantly fell into chaos. The same country, issuing a record-high budget of 122.3 trillion yen, and then tightening its belt to preach discipline. This isn’t schizophrenia — what is it?

The seemingly impressive surplus figures are actually built on two shaky pillars. The first, tax revenue is expected to grow by 7.6%, reaching a new high of 83.7 trillion yen — which requires good weather and good luck. The second, the government’s new bond issuance must stay below 30 trillion yen — provided there are no black swan events.

The question is. At the beginning of 2025, the Japanese government was still predicting a deficit for the 2025 fiscal year. By August, the tone had changed again. What’s behind this repeated forecasting? Is it over-optimism about economic growth, or is there some other calculation?

For the crypto market, these signals are very piercing. Japan has long been one of the main sources of global liquidity. If Japan really starts to tighten, where will the global money flow? Emerging markets, tech assets, or the crypto market? This question is worth pondering for traders.