Yen Carry Trade Collision: Bank of Japan’s Rate Shock Aims at Bitcoin | US Crypto News

Welcome to the US Crypto News Morning Briefing—your essential rundown of the most important developments in crypto for the day ahead.

Grab a coffee as global markets quietly shift with Japan’s bond yields surging and the BoJ hinting at a rate hike. The decades-long yen carry trade, which fueled stocks, crypto, and risk assets, could be unraveling faster than anyone expects.

Crypto News of the Day: Bitcoin Braces as BoJ May End Decades of Cheap Money

Global markets are bracing for a potential macro shock as the Bank of Japan (BoJ) prepares for its December 18–19 monetary policy meeting.

Traders now price a 90% chance of a 25 basis point rate hike, following signals from BoJ Governor Kazuo Ueda and persistent inflation above 2%.

BoJ Interest Rate Cut probabilities. Source: Polymarket

Japan’s 2-year government bond yield has climbed above 1%, its highest since the 2008 Global Financial Crisis, while the 10-year JGB hit a 17-year high, highlighting rising borrowing costs.

Why the Yen Carry Trade Matters

For nearly three decades, the yen carry trade fueled global risk-taking. Investors borrowed yen at ultra-low rates, converted it to dollars, and deployed capital into higher-yielding assets, including US stocks, bonds, and cryptocurrencies like Bitcoin.

When Japan raises rates or the yen strengthens, this trade unwinds violently, forcing rapid asset sales.

The consequences are not hypothetical: in August 2024, a BoJ hike triggered a $600 billion crypto market wipe, including Bitcoin falling to $49,000 and $1.14 billion in liquidations. Analysts warn that a similar scenario could repeat if Japanese yields rise further.