Is the Bank of Japan making a move again? This time, it might really be time to be cautious.

Looking back at history, yen rate hikes have never been a joke. The move in 2000 directly burst the internet bubble, causing devastation across global financial markets. Another round from 2007 to 2008 triggered the full-blown subprime crisis. Both times, the Nasdaq couldn’t withstand it and plummeted dramatically. Last July’s tentative rate hike saw the Nasdaq plunge 15% immediately, and now there are market rumors that there could be more action this month—keep in mind that the current AI bubble is at least as big as the internet bubble back then, if not bigger.

What’s even more critical is the issue of arbitrage capital. Over the past thirty years, the yen has basically had zero interest rates, and countless institutions and hedge funds have borrowed yen to invest in US dollar assets. Conservative estimates put the leveraged positions at $5 to $10 trillion. If a rate hike really happens, capital will inevitably flow back to Japan—this is a classic case of liquidity being drained.

Now, the Nasdaq, gold, and US treasuries are all experiencing volatile corrections. If the yen deals another blow, the market could bleed even faster. Although cryptocurrencies tout decentralization, when the broader environment collapses, no one is spared—when liquidity tightens, high-risk assets are the first to take the hit.

Last night, I set up a short position around 92599, and when I woke up this morning, I had an unrealized profit of 1662u. What happens next will depend on closely watching the Bank of Japan’s statements—the shockwaves from this macro event have only just begun to ripple through.