A couple of days ago, I came across a rather sobering analysis, and the more I think about it, the more something feels off.

Here’s the core logic: Japan might be about to officially start raising interest rates. Sounds like it doesn’t have much to do with us? Actually, it’s a big deal.

For the past decade or so, the Bank of Japan has kept rates close to zero, even going negative at times. What does this mean? Borrowing money is almost free. So those Wall Street guys went crazy with this—borrowing huge sums at low Japanese rates, then turning around and investing in US stocks, bonds, real estate, and of course, the crypto market. As long as the returns are higher than the borrowing cost, it’s easy money.

This strategy has a technical name: the “yen carry trade.” In recent years, rising US stocks and the crypto market have all been fueled, in part, by this flow of capital.

But now the script is about to flip.

Once Japan raises rates, the cost of borrowing goes up, and the arbitrage opportunity shrinks. So what happens to those funds “working” overseas? They either close out their positions or flow back home. Either way, it’s no longer worth sticking around.

The result—liquidity dries up. With no fresh money coming in, the market naturally struggles to hold up.

Just look at yesterday: ETH plunged from $3,000 to just above $2,700, a 10% drop in a single day. This might not be just a technical adjustment—it feels more like a signal: capital is pulling out, and it’s happening faster than expected.

If this logic holds, we might need to prepare for a long-term battle ahead. Bear markets never send advance notice when they arrive.