Welcome to the US Crypto News Morning Briefing—your daily summary of the most important developments in crypto.
Grab a cup of coffee as global markets quietly shift, with Japanese bond yields rising and the BoJ hinting at a rate hike. The decades-long yen carry trade that fueled stocks, cryptos and risk assets may unravel sooner than anyone expects.
Crypto News Today: Bitcoin Prepares as BoJ May End Decades of Cheap Money Era
Global markets are bracing for a potential macroeconomic shock as the Bank of Japan (BoJ) prepares for its December 18-19 monetary policy meeting.
Traders are now pricing in a 90% probability of a 25 basis point rate hike, following signals from BoJ Governor Kazuo Ueda and persistent inflation above 2%.
Japan's 2-year government bond yield has risen above 1%, the highest since the 2008 global financial crisis, while the 10-year JGB hit a 17-year high, highlighting rising borrowing costs.
Why the Yen Carry Trade Matters
For nearly three decades, the yen carry trade fueled global risk-taking. Investors borrowed yen at ultra-low interest rates, converted it into dollars, and invested the capital in high-yielding assets such as U.S. stocks, bonds, and cryptocurrencies like Bitcoin.
When Japan raises interest rates or the yen strengthens, this trade collapses violently, forcing rapid asset sales.
The consequences are not hypothetical: in August 2024, the BoJ’s rate hike caused a $600 billion drop in the crypto market, including Bitcoin’s fall to $49,000 and $1.14 billion in liquidations. Analysts warn that a similar situation could happen again if Japanese yields continue to rise.
In addition to Paul Barron, analyst Great Martis calls the BoJ's rate hike a potential "canary in the mine" for crypto and global markets.
“With the irresponsible BoJ forced to raise interest rates, the yen carry trade is starting to unravel, causing market turmoil. A canary in the mine,” Martis wrote in his post.
Meanwhile, early signs of stress are emerging as hedge funds and institutional investors closely monitor the simultaneous tightening of liquidity in Japan, the United States and China. This rare confluence could accelerate deleveraging.
However, there are some dissenting views. Analyst Negentropic notes that most of the leveraged investing has already been moved since October. In the same vein, Bob Elliot argues that the yen carry trade has largely diluted.
However, even a modest breakout could put pressure on highly leveraged crypto positions and risk assets globally.
If QE is not an immediate solution, what next for Bitcoin and global risk assets?
Nic Puckrin, founder of Coin Bureau, emphasizes that quantitative easing (QE) historically follows in times of crisis, not as routine interest rate changes.
The sudden tightening in Japan, the US and China suggests that markets could face further declines before liquidity support arrives. Investors who rely on easy money could face more volatility than expected.
Crypto markets are often the first to adjust to financial shocks, making Bitcoin and Ethereum indicators of liquidity stress.
As the BoJ rate decision approaches, traders should watch:
JGB yields,
USD/JPY levels, and
Leveraged positions.
If Japan continues to tighten, global deleveraging could continue until 2026, testing the resilience of both crypto and traditional markets.
Free Japanese money seems to be coming to an end. The market is now facing an environment of higher volatility, and cheap leverage in asset pricing may be changing to fundamental value.
Chart of the day
Here's a roundup of more US crypto news to watch today:
Why XRP's price refuses to rise despite Ripple's big moves.
Polymarket trader makes $1 million using Google search bets, raising fears of insider trading.
Bitcoin exchange supply is nearing a five-year low after this week's $2 billion purchase.
The IMF warns that stablecoins pose financial stability risks as cross-border flows surpass Bitcoin and Ethereum.
For four reasons, December may be the best time to start DCA in altcoins.
Wolfe Research identifies ‘maximum divergence’ as key Bitcoin market signal: What this means.
Yi He to women: “No one will give you mercy in business.”
Crypto equities pre-market -katsaus
Company Strategy (MSTR) $186.01 $184.62 (-0.75%)Coinbase (COIN) $274.05 $273.30 (-0.27%)Galaxy Digital Holdings (GLXY) $27.57 $27.73 (+0.58%)MARA Holdings (MARA) $12.44 $12.37 (-0.57%)Riot Platforms (RIOT) $15.59 $15.57 (-0.13%)Core Scientific (CORZ) $17.08 $17.09 (+0.059%)
The beginning of the crypto stock market: Google Finance
