Bank of Japan's rate hike decision might not affect crypto market deeply, yet it might create a lot of uncertainty and extreme volatility due to investors cautious approach.

According to PANews, the Japanese yen's previous interest rate hike led to a surge in market risk aversion, causing Bitcoin's price to drop from approximately $65,000 to $50,000. However, the upcoming yen interest rate increase is expected to have a different impact on the crypto market. Two main reasons contribute to this outlook: firstly, speculators currently hold net long positions in yen, making a swift reaction to the Bank of Japan's rate hike unlikely; secondly, Japanese government bond yields have been rising throughout the year, with both short-term and long-term yield curves reaching decades-high levels. This upcoming rate hike reflects official rates catching up with market trends. Meanwhile, the U.S. Federal Reserve has lowered interest rates by 25 basis points to their lowest level in three years while introducing liquidity measures. Overall, these factors suggest a lower likelihood of significant yen carry trade unwinding and reduced year-end risk aversion.