A prominent macro analyst has warned that an expected Bank of Japan rate hike could trigger another Bitcoin sell-off, as the cheap yen funding that has supported risk assets would begin to reverse.
Japan Set to Raise Rates to Highest Since 1995
The concern centers on the yen carry trade. For years, investors borrowed cheaply in yen and moved that capital into higher-yielding, higher-beta assets worldwide, including US tech stocks, emerging markets and crypto. According to arndxt, that flow has quietly underpinned risk assets, and a hike threatens to unwind it.
The analyst claimed the real danger is not the rate increase itself, but the carry unwind that can follow. If the yen strengthens sharply, leveraged positions funded in the currency may be forced to de-risk, creating a global liquidity squeeze. Bitcoin, which he described as a high-beta liquidity asset, tends to react badly when funding conditions tighten.
He pointed to the July-August 2024 episode as the clearest case, when a BOJ hike sent the yen surging, global equities lower and Bitcoin sharply down as carry trades unwound. Since the central bank began normalising policy in 2024, he noted, Bitcoin has repeatedly sold off around tightening events.
Such hikes turn most dangerous for Bitcoin when they coincide with a sharp yen rally, rising Japanese government bond yields, elevated US yields, risk-off moves in Nasdaq and semiconductors, thinning crypto liquidity and crowded long positioning, according to the analyst.
“If BOJ guidance is hawkish, USDJPY drops hard, and Nasdaq / semis weaken at the same time, then BTC could see another forced deleveraging move,” he wrote.
Bitcoin Nears $64K as Trump Confirms US-Iran Deal
The move followed Trump’s posts on Truth Social outlining the deal and sharply criticizing the earlier JCPOA agreement struck under the Obama administration, which he characterized as a path toward an Iranian nuclear weapon. He framed his own agreement as the opposite and said it was set to be signed the following day.
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