Author: Alertforalpha Compiled by: Plain Language Blockchain Are yen carry trades being closed out again? Is this the reason for the cryptocurrency crash? If you've been scrolling through social media today, you've probably seen the panic. Everyone's saying this is another repeat of August 2024. But the reality is: things may not be as you imagine. Why might it not be a yen carry trade? The narrative is simple: investors buy cheap yen to purchase high-yield borrowing assets (such as US tech stocks or cryptocurrencies). Now, with Japanese bonds surging, they are forced to sell these assets for yen. That sounds scary, doesn't it? However, this theory has two major flaws. 1. The yen has no peak. If everyone rushes to buy back yen to repay loans, the yen's value against the dollar should skyrocket. But it didn't. It is basically the same as last week. 2. The lever has disappeared. A macro analyst—someone who has spent his entire career trading yen—pointed out a few months ago that most of the reckless leverage had already been wiped out in the August crash. The traders suffered heavy losses and did not re-enter the same trades with the same intensity. So, if it's not a large-scale global liquidation, is that a document? The real culprits: algorithms and calendars The most boring explanation is usually the right one. We've just turned to the December calendar. This is the prime time to do the following: Institutional rebalancing Tax-loss Harting Automated Risk Resets "Algorithm cleaning" (The "Algo Flush") As the new month approaches midnight (UTC time), adjustments are likely to trigger sell orders to reset hedging and adjust risk inventory. This isn't emotional; it's mechanical. Institutions are selling underperforming assets (such as Bitcoin, which they bought at high prices) in order to consider gains in other directions before the end of the year. This explains why the sell-off was coordinated and mechanized—because that's how it is. What to focus on next? Bitcoin encountered resistance at the daily Bollinger Band moving average, leading to this period of volatility. But as long as we hold the $80,000-$82,000 level, the structure remains intact. This week is filled with macroeconomic data: Monday: Jerome Powell's speech Wednesday: ADP Unemployment Statistics and ISM Services PMI Friday: PCE expansion and data employment Fluctuations are expected. But don't let the image of a "yen panic" scare you into selling your positions. The worst of the leverage cleanup may be over.Author: Alertforalpha Compiled by: Plain Language Blockchain Are yen carry trades being closed out again? Is this the reason for the cryptocurrency crash? If you've been scrolling through social media today, you've probably seen the panic. Everyone's saying this is another repeat of August 2024. But the reality is: things may not be as you imagine. Why might it not be a yen carry trade? The narrative is simple: investors buy cheap yen to purchase high-yield borrowing assets (such as US tech stocks or cryptocurrencies). Now, with Japanese bonds surging, they are forced to sell these assets for yen. That sounds scary, doesn't it? However, this theory has two major flaws. 1. The yen has no peak. If everyone rushes to buy back yen to repay loans, the yen's value against the dollar should skyrocket. But it didn't. It is basically the same as last week. 2. The lever has disappeared. A macro analyst—someone who has spent his entire career trading yen—pointed out a few months ago that most of the reckless leverage had already been wiped out in the August crash. The traders suffered heavy losses and did not re-enter the same trades with the same intensity. So, if it's not a large-scale global liquidation, is that a document? The real culprits: algorithms and calendars The most boring explanation is usually the right one. We've just turned to the December calendar. This is the prime time to do the following: Institutional rebalancing Tax-loss Harting Automated Risk Resets "Algorithm cleaning" (The "Algo Flush") As the new month approaches midnight (UTC time), adjustments are likely to trigger sell orders to reset hedging and adjust risk inventory. This isn't emotional; it's mechanical. Institutions are selling underperforming assets (such as Bitcoin, which they bought at high prices) in order to consider gains in other directions before the end of the year. This explains why the sell-off was coordinated and mechanized—because that's how it is. What to focus on next? Bitcoin encountered resistance at the daily Bollinger Band moving average, leading to this period of volatility. But as long as we hold the $80,000-$82,000 level, the structure remains intact. This week is filled with macroeconomic data: Monday: Jerome Powell's speech Wednesday: ADP Unemployment Statistics and ISM Services PMI Friday: PCE expansion and data employment Fluctuations are expected. But don't let the image of a "yen panic" scare you into selling your positions. The worst of the leverage cleanup may be over.