BOJ Rate Hikes Threaten Yen Carry Trade, Bitcoin Bets

The Bank of Japan (BOJ) has begun raising interest rates as the country recovers economically and faces inflation and a weak yen. This shift ends decades of ultra-low rates that fueled the global yen carry trade, where investors borrowed cheap yen to invest in higher-yield assets like US bonds, tech stocks, and cryptocurrencies including Bitcoin.

Higher BOJ rates will increase borrowing costs in yen, potentially forcing traders to reduce risk exposure and unwind leveraged positions. This could pressure Bitcoin and other markets. The BOJ's upcoming rate decisions in September and October are expected to be key signals for Bitcoin, the yen carry trade, and global liquidity conditions.