Bank of Japan Raises Rates to 1.25% as BTC/JPY Rises
The second rate hike in three months puts more pressure on the yen, while BTC/JPY rises on bitFlyer and the carry trade comes back into focus.
Key Takeaways
- The Bank of Japan raised its policy rate by 25 basis points to 1.25%, the highest level in 31 years.
- At the same time, the yen weakened further and BTC/JPY on bitFlyer rose 0.5% to 12.06 million yen.
- The BOJ is keeping monthly bond purchases around 2 trillion yen to help cap long-term rates.
The Bank of Japan raised its policy rate on Friday by 25 basis points to 1.25%, the highest level in 31 years. The move came alongside further weakness in the yen and a rise in BTC/JPY on Japanese crypto exchange bitFlyer.
Yen Under Pressure
The Japanese currency fell against the dollar, pushing USD/JPY up to 156.70 from 156.20. At the same time, the bitcoin-yen pair rose 0.5% to 12.06 million yen. The dollar price of Bitcoin stayed mostly steady around $76,900 (€67,000), according to CoinDesk.
The rate hike is the second in three months. The central bank is trying to deal with stubborn inflation and the weak yen, while Japan was known for extremely low rates for years. That made borrowing in yen cheap and fueled the so-called carry trade around the world, where investors used yen funding to chase higher returns elsewhere.
More Focus on Global Flows
For European crypto followers, the key point is that Japanese rate decisions often reach beyond the local bond market. If rates in Japan keep normalizing, that could affect capital flows and demand for foreign investments. That makes the yen and BOJ policy something Bitcoin investors outside Japan should also watch.
The broader rate market is also part of the picture: global bond yields had already climbed to multi-year highs earlier, adding more pressure to risky assets.
What Investors Have Seen Before
At the same time, the BOJ is keeping monthly purchases of Japanese government bonds around 2 trillion yen, which is meant to slow long-term rates and keep the market calmer. That mix of a rate hike and support for the bond market makes the policy less one-sided than a hard tightening.
Historically, earlier BOJ rate hikes have often gone hand in hand with more volatility in risky assets, including crypto. In August 2024, a sharp move in stocks and Bitcoin already showed how sensitive markets can be to changes in Japan's rate policy.
