BOJ Rate Hike Could Pressure Bitcoin as Yen Carry Trade Faces Unwind

Bitcoin could face renewed selling pressure as the Bank of Japan (BOJ) prepares for a widely anticipated interest rate hike, according to a prominent macro analyst. Market watchers are closely monitoring the BOJ’s June 15–16 policy meeting, where officials are expected to raise the benchmark rate from 0.75% to 1.0%, marking Japan’s highest interest rate level since 1995.

The warning comes from pseudonymous analyst arndxt, who highlighted Japan as a significant macroeconomic risk for Bitcoin and other risk assets. The primary concern revolves around the yen carry trade, a strategy in which investors borrow funds in Japan at low interest rates and deploy the capital into higher-yielding assets such as U.S. stocks, emerging markets, and cryptocurrencies.

According to the analyst, the risk is not the rate increase itself but the potential unwinding of these leveraged positions. A stronger Japanese yen could force investors to reduce exposure to risk assets, creating a broader liquidity squeeze across global markets. Bitcoin, often viewed as a high-beta asset that reacts strongly to shifts in liquidity conditions, may be particularly vulnerable if funding becomes less accessible.

Arndxt pointed to the July-August 2024 market turbulence as a key example. Following a BOJ rate hike, the yen strengthened sharply, global equities weakened, and Bitcoin experienced a notable decline as investors unwound carry trades. Since Japan began normalizing monetary policy in 2024, similar tightening measures have repeatedly coincided with crypto market weakness.

The analyst noted that Bitcoin faces the greatest downside risk when a BOJ hike is accompanied by a stronger yen, rising Japanese government bond yields, elevated U.S. Treasury yields, weakness in technology stocks and semiconductor shares, declining crypto liquidity, and heavily crowded long positions.

Despite these concerns, Bitcoin showed resilience on Saturday, climbing from around $63,500 to above $63,900 after U.S. President Donald Trump announced a new agreement with Iran. Trump stated that the deal would lead to the reopening of the Strait of Hormuz, a crucial global oil shipping route. The development eased geopolitical concerns, boosting sentiment across financial markets and supporting gains in both cryptocurrencies and commodities.