Japan's Expected Rate Hike and Its Impact on Bitcoin and Global Markets
The Bank of Japan (BoJ) is expected to raise its policy rate to 0.75% at the December 19 meeting, marking the highest level since 1995. Governor Kazuo Ueda has indicated a high probability of this rate hike, with officials prepared to consider further tightening if the economic outlook supports such a move. Market pricing currently implies roughly a 90% probability of the rate increase, and key ministers under Prime Minister Sanae Takaichi are not expected to oppose the shift.
Following the report, the yen strengthened to about 154.56 per dollar, up from just above 155. This appreciation could trigger the unwinding of the yen-funded carry trade, whereby funds borrow yen to finance higher-beta assets. The expected rise in Japanese rates may lead to a reduction in this activity, affecting liquidity in global risk markets including cryptocurrencies.
Bitcoin has shown sensitivity to global rate expectations and macroeconomic volatility, trading near $93,000 after slipping to around $86,000 earlier in the week. De-risking in macro portfolios driven by the stronger yen could tighten the liquidity that had supported Bitcoin's recent rebound.
