$BTC
📉 Why a Japan Rate Hike Can Be Negative for Crypto
1) Carry‑trade unwinding reduces liquidity in risk assets
Japan has long been a source of cheap funding through yen‑based carry trades (borrow yen → invest in higher‑yielding assets like stocks or crypto).
When the Bank of Japan (BOJ) raises rates, this cheap funding becomes more expensive, prompting traders to unwind positions. That often forces selling of risk assets, including Bitcoin and other cryptos.
2) Historical patterns point to short‑term crypto price drops
Analysts and market observers have noted that past BOJ rate hikes tended to coincide with sharp Bitcoin corrections (20–30% declines in several past cycles).
This happens as capital flows back to safer assets or to reduce leverage, which crimps liquidity for speculative markets.
3) Stronger yen can reduce capital flowing into global risk markets
Higher Japanese rates often strengthen the yen and reduce global dollar liquidity — a tightening of risk appetite that can dampen crypto demand. The Daily Press
Short‑term effect:
🔹 Increased volatility
🔹 Possible downward price pressure on Bitcoin & altcoins
