Global financial markets have been watching a number: 160.

The USD/JPY has already fallen to 155.70, approaching this psychological threshold, hitting a nearly 34-year low. The most painful part is that the Bank of Japan in December urgently raised interest rates to 0.75%, yet the yen continued to decline—see, this is the beginning of a currency trust collapse.

**Why can't rate hikes save the yen?**

Basically, three points are blocking the way: the US-Japan interest rate differential is as high as 300 basis points, with dollar assets draining Japanese funds like a vampire; Japan's real interest rates are still negative, with prices rising for 51 consecutive months; domestic capital outflows have hit a ten-year high, creating a vicious cycle.

The Bank of Japan is now stuck—raising rates might crush an already fragile economy (Q3 GDP shrank by 1.8%), but not raising rates means watching inflation and exchange rates spiral out of control. Government debt has already exceeded 250%, leaving no fiscal space to maneuver.

**The turbulence is spreading:**

Domestic inflation is at 3.0% year-over-year, eroding people's purchasing power; nearly $19 trillion in carry trades are exposed to intense volatility; market risk aversion may spread like a plague to other asset classes.

Some are asking whether Japan's currency storm will spill over into the crypto market. Historically, there is such a pattern—when traditional assets become turbulent, some funds tend to seek low-correlation emerging assets. But the current linkage between the two sides still depends on how the Federal Reserve and other central banks respond.

Once 160 is broken, the market may react strongly. What do you think about the next move of the Bank of Japan?