Core Viewpoint - The concerns regarding a significant appreciation of the yen, the collapse of arbitrage trades, and pressure on Bitcoin are largely based on a misinterpretation of market structure, according to Moneta Markets Forex [1][5]. Group 1: Background on Yen Arbitrage Trading - Yen arbitrage trading involves borrowing yen at low financing costs and investing in high-yield assets, which has influenced global markets for decades [1][5]. - The expectation that the Bank of Japan (BOJ) will end its ultra-low interest rate policy has led to fears of capital returning to Japan, impacting global risk assets, particularly after Bitcoin experienced similar sentiment shocks in August 2025 [1][5]. Group 2: Interest Rate Differentials and Market Dynamics - Even after a potential rate hike, Japanese interest rates will remain significantly lower than those in the U.S., with expected policy rates around 0.75% compared to the U.S. rate of 3.75%, making U.S. Treasuries and other overseas assets still attractive [2][6]. - The 10-year Japanese government bond yield has risen to approximately 1.95%, and the two-year yield is above 1%, indicating that the market has already priced in the BOJ's tightening [2][6]. Group 3: Speculator Positions and Real Risks - Market data shows that speculators have maintained a net long position in yen throughout the year, suggesting that the market is well-prepared for a stronger yen post-rate hike, contrasting with the extreme bearish sentiment observed in mid-2024 [3][6]. - The yen's role as a global safe-haven currency has diminished, with more stable low-yield currencies like the Swiss franc competing for this status [3][6]. Group 4: Global Yield Chain and Risk Asset Pricing - While BOJ's rate hike may induce volatility, it is unlikely to replicate the extreme scenarios of August 2025, as market conditions indicate a gradual adjustment rather than a sharp shock [3][6]. - A further rise in Japanese yields could exert an "elevating effect" on U.S. Treasuries, potentially counteracting easing expectations and increasing global financing costs, which may suppress risk appetite [4][7]. - The global fiscal expansion could trigger debt concerns and elevate global yields, posing additional risks to risk asset valuations, making it more critical to focus on the BOJ's policy impacts on the global yield framework rather than fearing a sudden yen surge [4][7].