Everyone is watching the Federal Reserve’s show, but the real risk might be elsewhere.

This rally from $80,000 to $94,000 is essentially fueled by front-running rate cut expectations. The market has already told this story. What we should be more alert to now is the Bank of Japan, whose shoe could drop at any moment next week.

Think back to the storm of 1998—Japan suddenly tightened monetary policy, and liquidity across Asia was instantly drained. Indonesia and Thailand couldn’t hold on, and South Korea was on the verge of national bankruptcy. The Fed symbolically cut rates by 25 basis points, but it was useless. In early October, the yen surged violently, US tech stocks crashed in a collapse, and the Fed was forced to make an emergency 75-basis-point cut just to barely stabilize the situation. Only then did the US stock market see a retaliatory rebound.

Why is a yen rate hike so deadly? The logic is straightforward: Global capital is all playing the carry trade—borrowing ultra-low-interest yen to buy US Treasuries for the yield spread. If the yen suddenly soars, everyone has to frantically sell US Treasuries to buy back yen and repay debt, sending Treasury yields sky-high, and then tech stocks and BTC and other high-risk assets go down with them. This transmission mechanism is still effective today, and perhaps even more fragile.

Recent contract position data is showing something strange. Both CFTC and CME open interest are piling up like crazy, as if someone is setting up for a major harvest, just waiting for tonight’s rate cut moment. But I think the real test comes next: next week’s yen rate hike + CPI data combo. If the CPI unexpectedly soars again, that means both rate hikes and inflation pressures are hitting at once, doubling the market’s stress and likely causing volatility far beyond most people’s expectations.

Keep a close eye on Powell’s wording tonight. If it’s a dovish rate cut with mild messaging, the market might breathe and rally once more; but if it’s a hawkish rate cut and Japan really acts next week, the path ahead will be extremely tough.