BOJ Rate Hike Threatens Crypto Market Amid Unwinding of Yen Carry Trade

The Bank of Japan is set to raise interest rates from 0.75% to 1.0%, its highest since 1995, which could put pressure on Bitcoin due to the unwinding of the yen carry trade.

This trade involves borrowing cheaply in yen to invest in higher-yield assets like cryptocurrencies. A stronger yen would force investors to reduce their risk exposure, squeezing liquidity and causing Bitcoin to decline.

Past BOJ hikes have coincided with crypto market weakness, though recent geopolitical developments have temporarily boosted Bitcoin prices.