The Bank of Japan has finally moved. After decades of an ultra-low interest rate environment, this silent giant of the global economy is raising rates, breaking the long-standing zero interest rate fate.

Your first reaction might be: "Japan raising rates? What does that have to do with me?" Such a question is quite natural. But if you let this pass, you will miss a crucial moment in the reshaping of the global financial landscape. This is not a minor event in a neighboring country, but a major shift of global capital flows affecting markets from New York to London, from Tokyo to Singapore.

In other words, every penny in your account will face revaluation.

**Decades of cheap capital supply are running out**

For a long time, Japan has played the role of an invisible ATM for the global economy. A continuous flow of cheap capital has been exported from Japan to the rest of the world—US stocks, European bonds, emerging market assets. This mechanism operated so smoothly and discreetly that most investors were unaware of its existence. But now, this engine that has been running for decades is starting to sneeze.

The value of stocks, bonds, and various assets? They all rely on this continuous liquidity support. Once the support weakens, the entire ecosystem will need to be reshuffled.

**Undervalued financial game: Yen arbitrage trading**

To understand what will happen next, you need to grasp one of the most critical yet least discussed strategies in modern finance: Yen arbitrage trading.

It sounds complex, but it boils down to one sentence: international investors borrow yen from Japan at nearly zero cost and then invest this money into high-yield assets like US stocks and European bonds to earn interest rate differentials.

Sounds simple? But the scale of this trade is terrifying. Yen was once the second most important funding currency in the world after the US dollar. This massive pool of low-cost funds acted like an invisible hand, pushing up asset prices and continuously injecting liquidity into global financial markets.

And now? That hand is beginning to loosen.

**The true dawn of global de-leverage era**

As the Bank of Japan gradually raises rates, the yen borrowed at near-zero cost starts to become hot. The cost of borrowing rises, arbitrage opportunities shrink, and the yen capital flowing into global assets begins to reverse.

This is not minor. It’s a global reallocation of capital. High-leverage positions will face margin calls, funds will withdraw from high-risk assets, and areas suffering from liquidity shortages will be the first to encounter problems.

Your investment portfolio, whether in traditional stocks and bonds or cryptocurrencies, is within this reallocation’s scope. Liquidity is king. Without it, all valuation logic will have to be rewritten.