Japan just raised interest rates, so why did BTC crash first?

Let’s break it down from the root. As soon as the Bank of Japan signals a rate hike, the free lunch in the market is over—during the era of zero or even negative interest rates, borrowing was almost free, but now suddenly you have to pay interest. How could those investors who survive on arbitrage not panic?

The key is, there’s an even bigger risk: U.S. Treasuries.

Don’t underestimate the role of Japanese investors in the U.S. Treasury market. According to U.S. Treasury TIC data, as of early 2024, Japan held $1.15 trillion in U.S. Treasuries, making it the world’s largest foreign creditor. When the yield on Japan’s 10-year government bonds breaks the 1% mark, what does it mean? Japanese investors can simply repatriate their funds and buy local bonds instead, avoiding the exchange rate risk of holding U.S. Treasuries.

This triggers a chain reaction: sell U.S. Treasuries → U.S. Treasury prices fall → yields soar → global dollar borrowing costs rise.

At this point, risk assets suffer. Think back to the 2020 black swan event—BTC was the first to be dumped. Why? Because it's a 24/7 open casino, with no earnings reports, no cash flow, and lacking the hard data that supports “tech assets.” As we can see, this pattern still holds—when liquidity tightening signals appear, BTC is always the first to get kicked out.

ETH and SOL may have ecosystem support, but in the face of macro liquidity tightening, they still can’t escape the impact. Ultimately, the safe-haven nature of the crypto market is far weaker than imagined.