The Bank of Japan may raise interest rates to 1%. This seems like a small number. But the impact of this move on the crypto market is much deeper than you might think.
Let's put the facts on the table first.
The Bank of Japan (BOJ) will discuss raising its policy interest rate from the current 0.75% to 1% on June 15 and 16. Bloomberg confirmed this information from sources close to the matter. The market gives this increase a probability of between 80% and 96%. If it happens, the interest rate will reach 1% for the first time since 1995. A 31-year high.
BOJ Governor Kazuo Ueda has used increasingly hawkish language in recent weeks. At the April meeting, they decided to keep rates unchanged with an 8-to-1 vote. The only dissenting member, Hajime Takata, argued that it should go up to 1%. Now the rest of the board has come to the same point. The BOJ revised its inflation outlook upwards. The central bank is forecasting core inflation at 2.8% for fiscal year 2026, up from its previous estimate of 1.9%. Growth forecasts have also been lowered, from 1% to 0.5%. Rising inflation, slowing growth – this combination is prompting action from the central bank. But the real question is: why does this Japanese domestic issue concern the crypto market?
The answer is the yen carry trade.
For decades, the BOJ kept interest rates near zero or negative. In this environment, global investors borrowed extremely cheap yen. They used this yen to buy dollar-denominated assets. Stocks. Bonds. And crypto.
How big is this trade? Japan is the largest foreign buyer of US Treasury bonds. It bought in 13 of the last 14 months, totaling $1.24 trillion. A significant portion of this money is backed by cheap yen financing.
What happens when the BOJ raises interest rates? The yen appreciates. Those who borrowed in yen are forced to close their positions. This means they sell global assets. This selling pressure is reflected in risk assets. To stocks. To crypto. To Bitcoin.
History has concretely demonstrated how powerful this mechanism is. In August 2024, the BOJ made an unexpected interest rate hike. Bitcoin fell from $64,000 to $49,000 in 48 hours, a 23% drop. The rise to 0.50 in January 2025 caused Bitcoin to fall by 25% to 31% in 20 days. The rise to 0.75 in December 2025 pulled Bitcoin down by 3% at the time of the announcement.
The same mechanism kicked in with every BOJ hike.
Now it's coming to 1.
But this time there's something different. The market knows this. The probability is priced in between 80% and 96%. The BOJ, which kept rates stable before the Japanese election in February, has been preparing for this move for a long time. Expected bad news doesn't hit as hard as unexpected bad news. When the move to 0.75 occurred in January 2026, Bitcoin fell by 3% and recovered within hours. Because the market was ready.
There's another detail, and it's very important. While the BOJ is raising interest rates, it's considering pausing its bond purchase program from April 2027 onwards. What does this mean? The bank is making money more expensive on one hand, while slowing down the withdrawal of liquidity on the other. This balancing act could limit long-term liquidity concerns.
So what am I expecting and what am I doing?
In the short term, volatility is inevitable. When the BOJ rate hike is announced, there will be a reflex sell-off. This has happened every time. But this sell-off stems from the closing of a trade that has run out of fuel, not from a change in Bitcoin's fundamental value.
This week we have two central bank decisions ahead of us. The BOJ tomorrow. The Fed on June 17th. If the BOJ raises while the Fed keeps rates unchanged, the dollar may remain strong and the yen weak. This paradoxically supports the carry trade again. Indeed, this is exactly what happened in December 2025. The hike came, the yen weakened, and the carry trade continued.
I am maintaining my position in Gate. I'm thinking of treating the initial sharp move after the BOJ's rate hike is announced as a buying opportunity. But I won't overdo it, as I might lose more than I can afford. That's the most basic rule in crypto, and I've never changed it.
A rate hike level that comes once every 30 years. The highest in 31 years. These figures will create a big buzz in the media. The market will price in that buzz. You shouldn't mistake the noise for a signal.
#MyGateTradeStory
#Crypto #CryptoMarket
$GT $BTC $ETH
Let's put the facts on the table first.
The Bank of Japan (BOJ) will discuss raising its policy interest rate from the current 0.75% to 1% on June 15 and 16. Bloomberg confirmed this information from sources close to the matter. The market gives this increase a probability of between 80% and 96%. If it happens, the interest rate will reach 1% for the first time since 1995. A 31-year high.
BOJ Governor Kazuo Ueda has used increasingly hawkish language in recent weeks. At the April meeting, they decided to keep rates unchanged with an 8-to-1 vote. The only dissenting member, Hajime Takata, argued that it should go up to 1%. Now the rest of the board has come to the same point. The BOJ revised its inflation outlook upwards. The central bank is forecasting core inflation at 2.8% for fiscal year 2026, up from its previous estimate of 1.9%. Growth forecasts have also been lowered, from 1% to 0.5%. Rising inflation, slowing growth – this combination is prompting action from the central bank. But the real question is: why does this Japanese domestic issue concern the crypto market?
The answer is the yen carry trade.
For decades, the BOJ kept interest rates near zero or negative. In this environment, global investors borrowed extremely cheap yen. They used this yen to buy dollar-denominated assets. Stocks. Bonds. And crypto.
How big is this trade? Japan is the largest foreign buyer of US Treasury bonds. It bought in 13 of the last 14 months, totaling $1.24 trillion. A significant portion of this money is backed by cheap yen financing.
What happens when the BOJ raises interest rates? The yen appreciates. Those who borrowed in yen are forced to close their positions. This means they sell global assets. This selling pressure is reflected in risk assets. To stocks. To crypto. To Bitcoin.
History has concretely demonstrated how powerful this mechanism is. In August 2024, the BOJ made an unexpected interest rate hike. Bitcoin fell from $64,000 to $49,000 in 48 hours, a 23% drop. The rise to 0.50 in January 2025 caused Bitcoin to fall by 25% to 31% in 20 days. The rise to 0.75 in December 2025 pulled Bitcoin down by 3% at the time of the announcement.
The same mechanism kicked in with every BOJ hike.
Now it's coming to 1.
But this time there's something different. The market knows this. The probability is priced in between 80% and 96%. The BOJ, which kept rates stable before the Japanese election in February, has been preparing for this move for a long time. Expected bad news doesn't hit as hard as unexpected bad news. When the move to 0.75 occurred in January 2026, Bitcoin fell by 3% and recovered within hours. Because the market was ready.
There's another detail, and it's very important. While the BOJ is raising interest rates, it's considering pausing its bond purchase program from April 2027 onwards. What does this mean? The bank is making money more expensive on one hand, while slowing down the withdrawal of liquidity on the other. This balancing act could limit long-term liquidity concerns.
So what am I expecting and what am I doing?
In the short term, volatility is inevitable. When the BOJ rate hike is announced, there will be a reflex sell-off. This has happened every time. But this sell-off stems from the closing of a trade that has run out of fuel, not from a change in Bitcoin's fundamental value.
This week we have two central bank decisions ahead of us. The BOJ tomorrow. The Fed on June 17th. If the BOJ raises while the Fed keeps rates unchanged, the dollar may remain strong and the yen weak. This paradoxically supports the carry trade again. Indeed, this is exactly what happened in December 2025. The hike came, the yen weakened, and the carry trade continued.
I am maintaining my position in Gate. I'm thinking of treating the initial sharp move after the BOJ's rate hike is announced as a buying opportunity. But I won't overdo it, as I might lose more than I can afford. That's the most basic rule in crypto, and I've never changed it.
A rate hike level that comes once every 30 years. The highest in 31 years. These figures will create a big buzz in the media. The market will price in that buzz. You shouldn't mistake the noise for a signal.
#MyGateTradeStory
#Crypto #CryptoMarket
$GT $BTC $ETH
