The Bank of Japan is expected to raise its policy rate to 1% from 0.75% when its meeting concludes on June 16, the highest level since 1995, and to signal readiness to keep going.
It puts the yen carry trade back in focus, which has tended to impact crypto markets. Since decades, a cheap yen has funded leveraged bets on risk assets, crypto among them.
Higher Japanese rates and a firmer yen make that borrowing more expensive and can force an unwind that drains global liquidity. The last time the BOJ surprised with a hike, on August 5, 2024, the resulting unwind dropped bitcoin from about $64,000 to $49,000 in two days.
The move would line Japan up with the ECB, which hiked on Thursday, and a Fed that this week’s energy-driven inflation has kept on hold. Policy is tightening on every front, the opposite of the easy liquidity that fuels crypto.
As such, the hike is widely expected and mostly priced, and even at 1% Japan’s real rates stay deeply negative, so the carry trade is not dead. Japanese investors have kept buying foreign assets, and there is little sign of an unwind so far.
A sign of caution, however, is a hawkish forward signal landing on stretched positioning, with speculative bets against the yen back near their July 2024 levels.
Crypto is shrugging for now. Bitcoin trades up on SpaceX’s IPO day near $63,000, per CoinDesk data.