BOJ Rate Hike Looms: Yen Strengthens, Crypto Liquidity at Risk

The Bank of Japan (BOJ) is expected to raise interest rates at its upcoming September 17-18, 2026 policy meeting. The majority of economists polled by Reuters believe a rate hike to around 1.25% is likely, up from just 5% in July.

This development could strengthen the yen and lead to the unwinding of the yen carry trade, where investors borrow cheap yen to buy higher-yielding assets. Bitcoin (BTC) faces significant risk from leverage liquidations tied to this trade.

Ethereum (ETH) and XRP may also experience a risk-off move if market sentiment shifts in response to the rate hike. This could negatively impact crypto liquidity, DeFi/DEX activity, and token performance.