Bank of Japan Rate Hike Could Trigger 20-30% Bitcoin Decline as Markets Price 98% Probability

Core Viewpoint - The Bank of Japan (BOJ) is expected to raise interest rates by 25 basis points during its upcoming policy meeting, which could significantly impact global risk assets, particularly Bitcoin [1][2]. Group 1: BOJ Rate Hike Expectations - Prediction markets indicate a 98% probability of a BOJ rate hike, with only a 2% chance of maintaining current rates [2]. - If the rate hike occurs, Japan's policy rate will increase to 75 basis points, a level not seen in nearly two decades [3]. Group 2: Impact on Bitcoin - Analysts express concern that the anticipated rate hike is negative for Bitcoin, which is currently trading below the $90,000 psychological level [3]. - Historical data shows that Bitcoin has dropped significantly following previous BOJ rate hikes, with declines of 20-25% observed after such events [8]. Group 3: Yen Carry Trade Dynamics - The yen carry trade, where institutions borrow yen at low rates to invest in global assets, is under threat due to rising Japanese bond yields [4]. - If yields continue to rise, leveraged positions funded in yen may be unwound, leading to forced selling of risk assets, including Bitcoin [5]. Group 4: Current Market Sentiment - Bitcoin is currently trading at $88,956, down 1.16% in the last 24 hours, with traders focusing on potential volatility due to the BOJ's historical impact on the cryptocurrency [6][7]. - Analysts warn that if the historical pattern holds, Bitcoin could drop below $70,000 following the expected rate hike [8].