Bitcoin traders are turning their attention to Tokyo as the Bank of Japan prepares for a rate decision that could ripple through global risk markets.
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Bank of Japan to Raise Rates
The BOJ is widely expected to raise its benchmark rate to 1% from 0.75% on June 16, which would take Japanese rates to their highest level since 1995.
The risk comes from the yen, not just the policy rate. Leveraged funds increased speculative short positions in the yen to more than 115,000 contracts in the week ended June 9, the highest level since November 2017, according to Commodity Futures Trading Commission data.
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Why Yen Matters for Crypto
That matters because crowded yen shorts can reverse quickly. If the BOJ raises rates and signals more tightening, traders betting against the yen may rush to cover positions. A stronger yen could then pressure yen-funded carry trades, where investors borrow cheaply in yen and move money into higher-yielding or riskier assets.
Crypto is exposed to that liquidity channel. These trades have supported risk assets for years and analysts believe they have also helped crypto markets. A fast unwind could therefore hit Bitcoin alongside stocks and bonds.
According to crypto trader Dantek TTF Bot on X, BOJ rate hikes do not have a simple, repeatable impact on Bitcoin price. The biggest effects occur when they coincide with (or accelerate) yen strength and carry-trade reversals, says Dantek.
The current setup echoes July 2024 negative scenario, when a BOJ hike and yen rally coincided with broader volatility and Bitcoin dropped from roughly $65,000 to $50,000 within a week. If Governor Kazuo Ueda sounds cautious, markets may stay calm. If he points to faster tightening, Bitcoin could face another liquidity-driven shock.
Broader Crypto Market Is on the Rise
The BOJ decision also comes as Bitcoin is already rallying on a stronger global risk backdrop. BTC climbed above $65,500 after reports of a U.S.–Iran deal eased fears around the Strait of Hormuz and sent oil prices lower. That matters for crypto because lower oil prices can reduce inflation pressure, soften rate-hike expectations, and make traders more willing to buy risk assets like Bitcoin.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
