Bank of Japan May Raise Interest Rates to Highest Level Since 1995
Bank of Japan is considering a 25 basis point interest rate hike on December 19, which would bring the rate to 0.75 percent, the highest since 1995.
After this news, the Japanese Yen strengthened from 155 to 154.56. The strength of the Yen often creates macro deleveraging, which can unwind Yen financed carry trades.
If carry trades unwind, market liquidity decreases. This was the same liquidity that supported Bitcoin's rebound from November lows.
If financing costs continue to rise, leveraged funds may reduce exposure to high volatility assets like Bitcoin, which could put pressure on the crypto market.
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