2025-12-19 06:20:18

The Bank of Japan has delivered a heavy blow, sending shockwaves through the global financial markets. On December 19, the Bank of Japan announced a 25 basis point increase in the policy interest rate to 0.75%—the highest level in nearly thirty years. Before the news could fully settle, Bitcoin had already plummeted from its highs, with daily liquidations exceeding $600 million and 184,600 investors forced to close their positions. Market panic is spreading, but what is more worth paying attention to is what lies behind the data.

What exactly happened? Over the past decade, Japan has been the world's cheapest "financing factory." An environment close to zero or even negative interest rates has made the yen a golden key in the hands of institutional investors. A seemingly complex but straightforward arbitrage operation has been popular in the market for a long time: borrow nearly zero-cost yen, exchange it for dollars, then invest in high-volatility assets like Bitcoin and Ethereum, and amplify returns through leverage. Simple and brutal, with considerable profits.

How astonishing is the scale of this game? The total global scale of yen arbitrage trading has reached trillions of dollars. Now, the Japanese are tightening the faucet, and these funds relying on cheap yen financing are beginning to withdraw. A seasoned trader privately said, "The water in the pool is getting less; this is not just emotional fluctuation but real liquidity disappearing." When he said this, Bitcoin was approaching the $85,000 mark.

The real issue is: behind the large-scale retreat of traditional arbitrage funds, a blockchain-based, algorithm-driven decentralized liquidity network is quietly growing. The old rules of the game are being rewritten.

BTC1,04%

ETH1,39%

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MoodFollowsPrice

· 2025-12-22 06:02

Wow, the Japanese really dare to take action, now the arbitrage positions will have to rug pull. Trillions of dollars in liquidity just vanished, how will the crypto world handle this wave? They talk about decentralization liquidity, but isn't this just the beginning of another round of playing people for suckers? Why do I always feel like this is a signal before the big institutions close all positions? With the water in the pool gone, retail investors are like those dead fish. The yen arbitrage has collapsed, where will the next explosion point be? With institutional financing costs rising, the pros must be about to rug pull, right?

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CryingOldWallet

· 2025-12-21 16:37

Tens of trillions of dollars in arbitrage positions are about to disperse, this is the real cleansing. --- Japan's move has directly pushed those institutions living off zero interest rates into a corner. --- The water in the pool is really decreasing, you can feel the suffocating sense of liquidity disappearing. --- Wait, the yen arbitrage collapsing instead leads to Decentralization liquidity rising? This script is quite interesting. --- 600 million dollars got liquidated in one day, these 184,600 people are going to eat dirt for several months. --- Now the question is not where Bitcoin will fall to, but who will fill this tens of trillions of dollar hole.

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GateUser-c802f0e8

· 2025-12-21 12:01

How did the yen arbitrage collapse this time? They said it was very stable before... Something's not right, this is just the beginning, traditional funds are running away, is on-chain liquidity taking over? As a ten-year veteran sucker, it's the first time I've seen such a clear arbitrage chain being strangled to death... Getting liquidated for 600 million USD, I wonder who’s catching a falling knife this time. How many leveraged dogs did the Japanese central bank's punch hurt, haha. Real players already caught the scent and ran away, the last batch of catchers must be feeling awful. Wait, does this mean decentralized liquidity is about to take over? That would be truly terrifying... The golden decade of yen arbitrage has vanished just like that, times have changed.

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NFTFreezer

· 2025-12-21 01:12

The pool of water is indeed decreasing, but true players have already shifted to the chain. Are you still stuck on traditional financing?

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DefiOldTrickster

· 2025-12-19 06:49

Oh no, this time the Japanese really mean business. The good days of arbitrage are over, with trillions of dollars flowing out. Those of us who make a living from arbitrage need to think about how to survive.

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BoredRiceBall

· 2025-12-19 06:46

Damn, these Japanese guys are really ruthless. Saying to withdraw tens of trillions in arbitrage funds? Wait, what does this mean... Decentralized liquidity is the future? Old tricks are dying, a new game is starting? Feels like this time is different from before. Talking casually about a $600 million liquidation, but some people really went bankrupt overnight... The Bank of Japan's move has truly awakened many people. Tens of trillions... Is the pool really empty? This guy is right, liquidity disappearing is more terrifying than panic. So is this a buying opportunity or a time to hide? Everyone playing cards has to change the rules. Institutional funds have fled, how can retail investors survive? Blockchain is supposed to pick up the slack? Laughable. Now I understand why everyone has been saying DeFi is the future. The Japanese really know how to stir things up.

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GateUser-1a2ed0b9

· 2025-12-19 06:39

Yen arbitrage liquidation, at its core, is a leverage game that went wrong. Did some people make a killing from this drop?

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Ser_Liquidated

· 2025-12-19 06:38

The water in the pond is really drying up. This move by the Bank of Japan has directly exposed this game. 184,600 people have been wiped out. That number is a bit terrifying. Wait, the real question is, is the decentralized liquidity network quietly growing? This is just the beginning of the big show. The yen arbitrage game is now completely over. Who will be the next financing factory? A $600 million liquidation in one day feels like watching someone else's dream shatter... It's a bit silent. Institutions borrowed so much yen to buy coins, and now that Japan raises interest rates, they all run away. Is this liquidity crisis just the beginning? So, the final winners of the leverage game have never been the ones playing with leverage. Is now a good time to buy or should we keep watching the show? It feels like some people are still cutting leeks. This move by the Bank of Japan has directly rewritten the entire game rules. The old-era arbitrators are being pushed out.

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MaticHoleFiller

· 2025-12-19 06:32

The yen arbitrage funds are fleeing. To put it simply, they enjoyed profits before and now it's time to pay back debts. The crypto world fears this kind of large-scale liquidity crunch.

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Blockchainiac

· 2025-12-19 06:27

The Bank of Japan's move really stirred up the market, with 180,000 people being liquidated, which is quite brutal. The large-scale withdrawal of arbitrage funds is not surprising at all; the water in the pool is truly drying up. Wait, if decentralized liquidity picks up, this could actually be an opportunity? The trillion-yen arbitrage game is coming to an end; times are changing. I'm just worried that more central banks will follow suit and raise interest rates, the chain reaction could be terrifying. Honestly, it's the leveraged players who deserve it; they were gambling with borrowed money from the start. Blockchain liquidity network growth? That’s the real thing worth watching. People who got liquidated might still be crying, but those with foresight are already planning their next move.

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