The Bank of Japan may sell US Treasuries, triggering a Fed printing spree, and the crypto market is expected to welcome a new bull run.

Against the backdrop of global economic turbulence and fluctuations in financial markets, the Japanese banking system faces severe challenges during the Fed's interest rate hike cycle. By analyzing the foreign exchange hedging strategies of Japan's Norinchukin Bank and other Japanese commercial banks for U.S. Treasury investments, it is evident that these banks have had to sell U.S. Treasuries in the face of widening interest rate differentials and rising foreign exchange hedging costs.

The FIMA repo mechanism will play a key role in maintaining market stability. This mechanism allows central bank members to pledge U.S. Treasuries and obtain overnight freshly printed dollars. The increase in the FIMA repo mechanism indicates an increase in dollar liquidity in the global currency market, which may have a positive impact on Bitcoin and the crypto market.

Japan's Norinchukin Bank recently announced that it will sell $63 billion in U.S. and European bonds, primarily U.S. Treasuries. This is due to the widening interest rate differential between the dollar and yen, which has caused foreign exchange hedging costs to exceed bond yields. Other Japanese commercial banks are also facing the same dilemma and may follow suit in the dumping.

To avoid a surge in U.S. Treasury yields, U.S. Treasury Secretary Yellen may ask the Bank of Japan to purchase these bonds and use the FIMA repurchase mechanism to exchange U.S. Treasuries for newly printed dollars from the Fed. This will increase the supply of dollars and could bring a new bull run to the crypto market.

In this case, investors may consider shifting from high-yield stablecoin staking products to crypto risk assets. The predicament of the Japanese banking system may become a new catalyst for increasing dollar liquidity, providing another support for the crypto bull run.

In general, to maintain the current dollar-based financial system, the supply of dollars must increase. This could bring new investment opportunities to the crypto market.