The Bank of Japan is expected to raise interest rates to their highest level in three decades, a major policy shift that could ripple through global markets and add fresh pressure on risk assets such as Bitcoin.
Market participants anticipate the move as inflation in Japan remains persistently above the central bank’s target, forcing policymakers to continue unwinding years of ultra-loose monetary policy. A rate hike to around 1.5% would mark Japan’s most aggressive tightening since the mid-1990s and further narrow the policy gap between Tokyo and other major central banks.
The expected increase has already strengthened the yen, making carry trades less attractive and prompting investors to reassess exposure to high-risk assets. Historically, tighter monetary conditions and a stronger yen have weighed on speculative investments, including cryptocurrencies.
Bitcoin, which has struggled in recent weeks amid fading risk appetite and looming global macro events, could face additional headwinds if Japanese yields rise further. Higher interest rates typically reduce the appeal of non-yielding assets, particularly in an environment where investors can earn more from safer government bonds.
Analysts warn that while Japan’s rate hike is driven by domestic inflation dynamics, its global impact could be significant, especially for digital assets that remain sensitive to shifts in liquidity and monetary policy.
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