Ten years to sharpen a sword, every rise and fall has its reason; not clinging to long or short positions, securing profits is the way to peace.

Hello everyone, I am Tommy, a cryptocurrency economist and a trader rooted in the crypto space for 8 years studying Ethereum (ETH). First, let me share my three "no's" in trading: do not trade when tired, sleepy, or fatigued; do not trade when in a bad mood; do not trade when you do not understand the market. (In a poor state, one cannot perform at normal levels, leading to significant errors in market judgment.)

Follow the K-line Life Tommy public account: Opportunities are created every day in different time segments, there is no need to rush, the original intention has never changed. While creating profits, focus on professional risk control to add value to investments, ensuring longevity and honoring past encounters and trust. I provide real-time guidance and am online 24 hours a day. You can leave a message if you have questions; all strategy insights are open for free, and this is the only designated public account to follow. Do not use your financial strength to estimate the market; do not let profits or losses affect your determination! - Tommy

The December 19th meeting of the Bank of Japan to decide whether to raise interest rates is a life-and-death line for you.

Why? Because if Japan really decides to raise interest rates, it will trigger a black swan event comparable to the subprime mortgage crisis globally. At that time, global stocks, funds, Bitcoin, and gold will all be caught up in it, and this crisis poses enormous risks. So today, let’s analyze what you should do next. First, I want to emphasize that the Japanese yen is not an ordinary currency; it is the largest arbitrage currency in the world. What does arbitrage mean? It means borrowing this cheap money to earn a stable interest spread, that’s how simple it is. For the past 30 years, Japan has been implementing a zero-interest rate policy, even going negative, turning itself into a global liquidity ATM. What does that mean? According to data, starting from February 1992, Japan first introduced zero interest rates, and by 2016, it even adopted negative rates, which will only be exited in March 2024. Over these 25 years, if you borrowed 1 million yen and converted it to dollars, depositing it in a bank to earn 5% interest, how would you pay it back? You would repay in yen, and the arbitrage in between would be enough to make you a fortune. Can you not understand my point? Of course, we do not consider exchange rate changes. Many people, like Mrs. Watanabe in Japan and Warren Buffett, have made crazy arbitrage profits through this model, with nearly $4 trillion in yen arbitrage funds, equivalent to 3.5% of the global annual GDP. What did they do with this money? They invested in U.S. stocks, Bitcoin, and gold, like a faucet that has been running for 24 hours, propping up the global asset bubble for nearly a decade. You might wonder why gold has been rising so sharply recently or why U.S. stocks have surged? One important reason is the zero-cost yen, as this faucet continuously releases water into the market, creating strong liquidity that leads to asset appreciation worldwide. If on December 19th they really decide to raise interest rates, do you know what the result will be? Friends, that would be like turning off this faucet, and recently, capital is flowing back to Japan. How is it flowing back? You have to cash out the Bitcoin you bought, cash out the U.S. stocks, cash out the gold, because many large institutions bought using leverage. If you bought with leverage, the pressure is immense. What if liquidity suddenly dries up? The only option is to sell off assets, leading to a sharp decline in asset prices, such as a crash in gold and U.S. stocks. This is the actual phenomenon. Do you understand? Why is Japan doing this?

What is your reason for raising interest rates? Because Japan is out of money. First, on November 28, Japan released data showing that the core CPI, which measures consumer prices, rose by 2.8% year-on-year, completely breaking the 20-year deflation. Previously, Japan relied on zero interest rates to stimulate consumption, but in recent years, the yen has continued to depreciate. In January 2020, 1 dollar could be exchanged for 100 yen; now it is 157, close to 158, hitting a nearly 10-month low. Japan is also a major importing country. Once the yen depreciates, what happens? The prices of imported food, oil, and various bulk commodities will rise because the domestic currency depreciates, making imports more expensive. Now, the Japanese public is protesting furiously, and the Japanese government has no choice but to intervene. So how can they intervene? They must use money, but Japan's GDP was already $5 trillion in 1995, and by 2021, it was still $5 trillion. Isn’t that funny? Three years later, in 2024, it will drop to $4 trillion. For 30 years, it has not only failed to grow but has also declined. With long-term zero profitability, companies lack the motivation to innovate, and banks cannot make money, so they dare not lend. What can the government do? If you cannot collect taxes, what can you do? You can only keep issuing bonds and borrowing money. Do you know how much they have to borrow? They have borrowed $9.8 trillion in national debt, accounting for 265% of GDP, ranking first in the world. The worst part is the interest; the yield on 10-year government bonds has soared to 1.825%, the highest since the financial crisis, while the 20-year yield is 2.853%, and the 40-year yield has reached a historical peak of 3.747%. Just the one-year interest at 3% amounts to $268.1 billion, accounting for 50% of fiscal revenue. By 2024, the deficit will reach $234.7 billion. This is a snowball effect. What are you envious of? It’s bankruptcy; it cannot hold on. Half of your finances are spent on paying interest, so bankruptcy is inevitable. So what can be done? Raising interest rates will increase yields, encouraging companies to innovate, earn more, and pay more taxes. Banks will also be willing to lend, helping companies innovate and grow, allowing banks to earn more and pay more taxes, right? In the long run, this will create a positive cycle. The problem is, do you know if you can afford the interest? So I tell you, raising interest rates is like drinking poison to quench thirst; not raising rates is just waiting to die.

So what about the situation in the next two years? I believe Japan will most likely choose the lesser of two evils and will likely raise interest rates. Many people might say, "What does this have to do with us? Japan raising interest rates is their own business; what does it have to do with us ordinary people?" It has everything to do with us! If you think this way, you are gravely mistaken. I tell you, if nearly $4 trillion in arbitrage funds withdraw, how will it affect us? Do you know? It will disrupt the global market through three channels, and none of you can escape. The first step is that there is absolutely no money left. In fact, yen funds are like invisible buyers of U.S. stocks, with U.S. stocks alone accounting for over $1 trillion. You can predict that once interest rates are raised, Japanese institutions will first sell U.S. Treasuries. The U.S. debt is currently $37 trillion, and Japan is the second-largest holder. What happens when they sell U.S. debt? The price of U.S. debt will fall, and its yield will rise, meaning the cost of borrowing globally will soar. Let’s talk about data: the collapse of Silicon Valley Bank in 2023 was due to interest rates rising too quickly. This time, the scale should be more than ten times that. So you must not panic. The second step is that the yen will appreciate, forcing everyone to cut losses. Currently, the exchange rate is 150 yen to 1 dollar, and after the interest rate hike, it will rise to 140. What will those who borrowed yen to buy assets do? They will rush to issue stocks, sell Bitcoin, and sell gold to repay debts. What debts? The yen debt you borrowed at zero cost; in the past, you could repay it with 156 yen, but now you can only repay it with 140, meaning you have suddenly lost 10%. What happens when you sell? It leads to asset prices falling, and as prices fall, debts become harder to repay, leading to more selling and further declines, creating a terrifying vicious cycle. The collapse of Lehman Brothers in 2008 was due to this leverage breaking. This time, the arbitrage leverage is even greater. The third step is that Japan's stock market, bond market, and currency market will all crash globally. For example, if Japan raises interest rates by 1%, the annual interest on government bonds will be 10 trillion yen. What does that mean? 60% of fiscal revenue must be used to pay interest. So what will happen? Someone will definitely sell Japanese bonds. If Japanese bonds collapse, what will happen to the stock market? It will also crash, leading to significant volatility in Japan. This wave of impact is unimaginable. Through multinational companies, it will affect China, where 120,000 companies do business with Japan. Companies like Toyota and Sony will see their stock prices plummet, and our suppliers and export orders will be affected. Therefore, I repeatedly emphasize that the December 19th meeting of the Bank of Japan is a life-and-death line. The yen carry trade is an invisible leverage in global finance, like a faucet. Once it breaks, no asset can remain unscathed because the small daily lives cannot hold on.

Protecting your money is the most crucial thing. The subprime mortgage crisis in 2008 and the stock market crash in 2015 both proved that the risks of others will eventually reach you. Therefore, before December 19th, do not make reckless moves. Keep a close eye on Tommy's updates, watch my live broadcasts more, and be cautious. Surviving in this liquidity tsunami is more important than anything else.

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