Bitcoin Keeps Weekly Loss as ‘Anti-Risk’ Yen Strengthens After BOJ Rate Hike

The Bank of Japan’s interest rate hike pushed the Japanese yen to its strongest level against the U.S. dollar since March.

BTC clings to weekly losses as rising yen likely leads to global financial tightening

Bitcoin {{BTC}} remained on the defensive while the Japanese yen (JPY) strengthened in the forex market after the Bank of Japan (BoJ) raised interest rates and announced other measures to tighten liquidity.

In an aggressively hawkish move, the central bank raised its target for the unsecured overnight call rate to around 0.25% from a previous range of 0%-0.1%. It also said it would scale back liquidity-boosting bond purchases to around 3 trillion yen ($20 billion) a month through the first quarter of 2026. As of March, the bank was buying about 6 trillion yen a month of bonds.

Bitcoin held steady near $66,000, down 2% on the week on expectations of renewed interest rate cuts from the U.S. Federal Reserve. That has spurred demand for the “anti-risk” yen and pushed the USD/JPY rate to around 150, the yen’s strongest level since March, according to TradingView. Futures tied to the S&P 500 rose 0.4%, signaling a positive opening on Wednesday.

Traders use the low-yielding Japanese yen to invest in or fund investments in higher-yielding assets. As such, a significant rise in the yen tends to force so-called carry trades, forcing investors to reduce their exposure to riskier assets, including cryptocurrencies.

“The yen’s popularity as a funding currency could have a domino effect on other markets and help tighten global financial conditions,” BlackRock said in a weekly note. “The yen’s resulting rise has led investors to use lower-yielding yen to buy higher-yielding currencies — a so-called carry trade.”

The yen has risen about 6.4% against the dollar this month, its biggest gain since November 2022. That could partly explain the recent risk-off trend in tech stocks and Bitcoin’s renewed bullish trend near $70,000.

The yen could appreciate further and increase risk aversion if the Fed gives a strong signal of easing later on Wednesday, paving the way for rapid rate cuts.