What happened last two times Japan rised Rates?
August 2024 Crash📉
January 2025 Crash📉
#btc #bitcoin #crypto
Japan keeps interest rates extremely low (near 0% for decades).
Investors borrow cheap yen.
They use that money to invest in higher-yield assets:
US stocks
emerging markets
crypto
bonds
real estate
📌 They borrow yen because it’s cheap → invest in something that pays more → profit from the difference.
This is called a carry trade.
Why is this dangerous when Japan raises rates?
When Japan increases rates, the carry trade becomes risky:
1️⃣ Borrowing yen becomes more expensive
Investors suddenly have to pay more to service the loans they used to buy other assets.
2️⃣ They unwind positions
People who borrowed yen now need to:
sell their investments (stocks, crypto, bonds)
buy back yen
repay the loans
This causes:
✔ selling pressure globally
✔ yen strengthens
✔ liquidity drains from risky assets like BTC
BTC is one of the most “risk-on” assets.
When big funds unwind carry trades:
They sell Bitcoin to free cash
Liquidity dries up
Volatility increases
Leverage gets liquidated
This causes fast, sharp drops, like what happened in:
August 2024
December 2024
Why does the yen carry trade matter so much?
Because it’s HUGE.
It’s estimated that hundreds of billions of dollars (some analysts say even $1 trillion+) are tied to yen-funded positions.
When Japan suddenly changes policy, the effects hit:
global stocks
bonds
currencies
crypto
emerging markets
