Did Japan's interest rate hike cause a surge in the cryptocurrency market?

I should have talked about it on the 18th. The specific data and ideas are still in my mind. It's not too late to talk about it today. Today, let's talk about the impact of the yen's interest rate hike on the world.

Those who understand the Japanese economy or have studied finance will not be surprised by Japan's "negative interest rate", and Japan has finally ended the 30-year era of negative interest rates. Although it is only a small step forward, it has taken a big step in history.

In the past, we often talked about positive interest rates, and there is also the saying of negative interest rates. How to understand it? Simply put, if you borrow money from a bank, the positive interest rate is one thousandth. If you borrow 1,000, you have to pay back 1,001, while the negative interest rate is that if you borrow 1,000, you only need to exchange 999. It is not good for banks, but good for borrowing. Many of us will think this is a good thing, but it's a pity that this is a matter between the Bank of Japan and the bank, and ordinary people can't get this benefit.

Why does this phenomenon occur? It is mainly because of Japan's rapid development in the past 30 years. Prices have gone from inflation to deflation. Those who have studied the Book of Changes know that things will turn to the opposite extreme, and the negative pole will return to the positive pole, and the positive pole will return to the negative pole. When inflation reaches a certain point, prices are too expensive, purchasing power will decrease, and finally cause deflation. Japan's negative interest rate growth is to end this deflation and enter inflation, which is beneficial to the economy.

This is exactly what I told you about interest rate cuts and interest rate hikes last night. We must maintain that degree. Exceeding that degree is a bad thing. We need to talk about the impact of Japan's interest rate hike on the world. First of all, let's talk about a concept and a set of data.

Japan is a small country economy with limited domestic space and development opportunities, which makes most of the funds flow overseas. Softbank and Sony have poured funds into overseas markets. According to a set of data in 2023, Japan's overseas investment funds are 3.5 trillion US dollars, while Japan's annual GDP is 4.2 trillion US dollars. This amount of funds accounts for 83% of Japan's GDP, which also makes Japan the largest overseas asset country in Asia.

The principles of economy and stocks are the same. Wherever these hot money flows to, the economy will rise, and wherever they flow out, the economy will decline. Japan is the largest bond country of the United States, and most of its funds are in the United States. When we see how the hot money flows back, we will know what impact it will have on the US economy.

Back to the concept of negative interest rates, this has led domestic institutions to borrow a lot of money for arbitrage transactions. The funds borrowed from China are invested in the European and American markets, and then transferred to their own country, making Japan the largest arbitrage trading body. Now it has become positive. Although the amplitude is not large, only one thousandth, and the volume has little impact, this slight increase will naturally attract foreign investment. The funds that have flowed out of the country in the past have returned to make up for the profits, which is also called capital repatriation.

This kind of capital repatriation has increased Japanese funds and economic growth, while the United States has seen a significant withdrawal of funds, which is a shock to the US stock market. The US dollar is tied to the world, and this is also a disguised impact on the global economic ship, so we have to consider the impact of Japan's interest rate hike, but because the rate hike is too small, the yen has not risen but fallen, which has also become a joke in the capital market.

It is still the most important sentence I said to everyone last night. Interest rate hikes and interest rate cuts are not the fundamental factor affecting the overall market of the currency circle. It is the economic instability that provides an arbitrage space for the currency circle.

As for the trend of BTC, it will not go down at this level. It does not even want to give up 54,000. From the whole picture, even if there is a third bottom, it will be limited to around 58,000 at most.