The Bank of Japan has raised interest rates to 0.5%, officially ending the era of negative interest rates. How big is the impact? Global liquidity is tightening, and the crypto market is taking a direct hit.

Simply put, carry trades don’t work anymore. Previously, people borrowed cheap yen, converted it to US dollars, and then poured it into high-risk assets like Bitcoin—that’s how bull markets got inflated. Now, borrowing costs have gone up, arbitrage opportunities are shrinking, and funds are pulling out rapidly. In just one week, Bitcoin has plunged over 20%, with its market cap evaporating by more than 10%.

Altcoins are suffering even more. Coins like Ethereum and SOL have dropped even harder. The crypto market already has high leverage, so when panic sets in, volatility just explodes.

What’s the short-term outlook? Global risk appetite is declining, and even if the Fed cuts rates, it won’t be enough to stop yen from flowing back; December will likely continue to see volatility. But in the long run, if the yen stabilizes, safe-haven demand will decrease, and crypto as an inflation hedge might have a chance to bounce back.

What’s the strategy now? Control your positions and keep a close eye on the Bank of Japan’s next moves. The crypto winter is almost over; the bull market just needs a bit more patience.