The Bank of Japan's interest rate moves are currently perhaps the most dangerous hidden risk in global markets.

For years, Japan has maintained a zero or even negative interest rate policy, becoming a "money-printing machine" for global arbitrageurs. Institutions have been frantically borrowing low-interest yen, converting it into US dollars, and pouring it into US stocks, bonds, emerging markets, and cryptocurrencies—popular assets like SOL, XRP, and BNB have all benefited from this liquidity feast. This is the classic "Yen Carry Trade": low-cost borrowing plus high-yield assets, profiting handsomely from the interest rate differential.

But if the Bank of Japan actually hits the rate hike button, the rules of the game will change overnight. The cost of borrowing yen will spike, and the arbitrage window will shrink or even disappear. Capital providers will be forced to unwind positions: selling stocks, bonds, and crypto assets to exchange back into yen and repay loans. At the same time, the yen itself will appreciate due to surging demand, further amplifying the pressure to unwind positions—this is the terrifying "deleveraging death spiral," reminiscent of the global liquidation storm after Lehman Brothers collapsed in 2008.

This type of structural risk is even more deadly than single-market volatility. The real destructive power is often hidden in the instant when leveraged trades collapse in reverse.