Markets eye Bank of Japan as yen tests 40-year lows
Markets eye bank japan Friday interest-rate decision as the yen repeats near 40-year lows against the US dollar. USD/JPY is approaching 164, the BoJ policy rate sits at 1%, and analysts warn a carry-trade unwind like August 2024 could again pressure Bitcoin and altcoins if policy shifts.
Key Takeaways
- USD/JPY approached 164 on Tuesday, close to fresh 40-year highs seen last week.
- The Bank of Japan decides on rates on July 31; the policy rate is already at 1%, its highest since September 1995.
- Markets imply about a 98% chance of a hold, while Polymarket put no-change odds near 99% as of Tuesday.
- Analysts warn another yen carry-trade unwind could hit crypto liquidity, echoing August 2024.
Why does the Bank of Japan meeting matter for crypto?
Japan's yen is a major global funding currency, so BoJ policy can move liquidity far beyond Tokyo. For crypto traders, the yen carry trade has long acted as a funding source that can reverse quickly when rates or the exchange rate shift.
That matters this week because the BoJ meets Thursday and Friday to decide whether to adjust its benchmark rate. According to Cointelegraph, markets largely expect no change after the June hike, but the bank has signaled further tightening later if inflation and financial conditions warrant it.
Readers following wider fintech and crypto alerts are watching the same risk: a sudden unwind can drain leverage and hit Bitcoin and altcoins hard.
How weak is the yen against the US dollar?
TradingView data cited by Cointelegraph showed USD/JPY approaching 164 on Tuesday, just below new 40-year highs printed last week. The pair has stayed above the key 160 level even after June's rate increase.
Japan's deep liquidity, limited capital controls, and decades of low rates made the yen the standout non-dollar funding currency. Since inflation picked up in 2022, that setup has raised the odds of carry-trade stress and sharper liquidity squeezes.
The BoJ has also flagged that a weaker yen can feed into prices and inflation expectations as firms raise wages and prices more readily than in past cycles.
Could a yen carry-trade unwind hit Bitcoin again?
Yes — that is the core market worry. In August 2024, interventions tied to yen stabilization sparked a snap carry-trade unwind that quickly pressured Bitcoin and altcoins.
Analyst Ricky Ho argued the carry trade only works while Japanese rates stay exceptionally low and the yen remains stable or keeps depreciating. He also noted unwinds are rarely gradual because participants run high leverage.
Ho said investors may be too focused on whether the next hike lands in September, October, or December. The bigger point, he argued, is that the direction of BoJ policy has already changed — a shift that can ripple through a global market still built around Japan's old easy-money status quo.
With USD/JPY building on multi-decade extremes and the July 31 decision approaching, crypto traders are treating yen volatility as a macro risk, not a side show.