Bitcoin just stabilized above $92,000, and Ethereum has also climbed back above $3,100. On the surface, it looks quite stable, but the global financial markets are actually playing a dangerous game.

Having been involved in the market for nearly twenty years, from stocks to the crypto world, I must say some hard truths: the final wave of this market in 2025 is not primarily about technical analysis, but about the "currency wars" between two central banks.

The Federal Reserve is preparing to cut rates and loosen monetary policy, while the Bank of Japan plans to tighten liquidity. How will this torn situation affect our holdings? Is it a blessing or a curse?

# The Tug-of-War for Liquidity

Many people focus only on the actions of the Federal Reserve, completely ignoring the "invisible whale" in Asia—the Bank of Japan.

**Most Dangerous Signal: Yen Arbitrage Positions Are About to Explode**

Remember the crash last August? The Bank of Japan suddenly hiked interest rates, causing a collapse of over a trillion dollars in yen arbitrage trades worldwide, which directly pushed Bitcoin through a key level.

Now, the Bank of Japan is again making hawkish statements, preparing to hike rates to rescue the yen exchange rate. This essentially means the cheapest borrowing costs worldwide will increase. Logically, this is like "bleeding" risk assets.

**But why is Bitcoin still rising?**

Simple—the "faucet" from the Federal Reserve is more aggressive than the "pump" from the Bank of Japan. The market is betting on the speed and intensity of liquidity injections from the US.

But how long can this balance last? Once Japan hikes rates more than expected, or if the Fed cuts rates less than anticipated, the entire logic will reverse.

The speed at which arbitrage positions are closed is much faster than retail traders can run away.