The Bank of Japan's interest rate hike signals are shaking the entire crypto market. The continuous rate hike expectations from the central bank governor directly threaten virtual assets that rely on global cheap liquidity.

The root of the problem is clear: yen carry trades are retreating. The $4 trillion of low-cost carry trade funds accumulated over the past 25 years are beginning to accelerate their return to Japan as borrowing costs rise. High-risk cryptocurrencies are naturally the first to be affected, becoming the main target of capital withdrawal.

Market data speaks volumes. As of December 23, Bitcoin spot net outflows exceeded $330 million in 24 hours, while Ethereum followed with a net outflow of $81.56 million. This is not a small move—funds are voting with their feet, and a risk-averse mindset has already taken shape.

History tends to repeat itself. In July last year, when the yen appreciated, Bitcoin plummeted 20% within a week. Now, the market is pricing in the expectation early, with Bitcoin repeatedly testing the $90,000 level, and high-leverage positions facing the risk of liquidation at any time. Many stop-loss orders are just waiting at the next gap.

But the market is never entirely pessimistic. Opportunities do exist, albeit niche: compliant stablecoins like USDC have become safe havens for funds, with a single-day net inflow of $168 million. FDUSD also attracted $7.72 million in inflows. This is the real direction of capital safe-haven.

On the other side, some altcoins are jumping around on short-term hot money speculation, with LIGHT surging over 70% in a single day and SOPH up 40%. It looks exciting, but in reality, it’s purely an emotional game. Concentrated trading and extreme volatility are essentially gambler psychology rather than fundamentals, with risks being outrageously high.

What should be done? Strategies must be both offensive and defensive. First, reduce high-leverage operations—don't wait until rate hikes are implemented to regret forced liquidations. Second, tilt positions toward stablecoins, keeping some cash on hand for pullback opportunities. Lastly, beware of profit-taking from short-term surging coins—these are often moments to cut the leeks.

What to watch closely? The exchange rate of 1 JPY to 0.00642 USD. The subsequent appreciation of the yen will directly determine capital flows. The faster the appreciation, the greater the pressure on the crypto market. This serves as a barometer for monitoring risk.