Why the Bank of Japan Is So Critical for Bitcoin

Core Viewpoint - The Bank of Japan (BoJ) plays a significant role in global liquidity, impacting Bitcoin prices, especially when liquidity tightens [1]. Group 1: Role of the Bank of Japan - Japan has maintained near-zero or negative interest rates for decades, making the yen one of the cheapest currencies to borrow [2]. - The yen carry trade has emerged, where large institutions borrow yen and convert it into higher-yielding assets, including Bitcoin [3]. Group 2: Impact of Interest Rate Changes - A potential BoJ rate hike of approximately 25 basis points could raise Japan's policy rate to around 0.75%, still lower than US or European rates [6]. - Even a small increase in rates represents a structural shift in funding conditions, which could disrupt the current funding system that benefits Bitcoin [8].