Japan’s Central Bank Boosts Bitcoin Rally: What’s Next for Crypto?

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Japan’s central bank cools rate hike expectations, removing a key risk for <a href="https://jpygbp.com/btc-usd/">bitcoin</a>‘s rallyMarkets

What to know:

  • Bitcoin’s surge past $74,000 was helped by the Bank of Japan’s signal that it is unlikely to raise interest rates at its April 28 meeting, easing macro pressures on risk assets.
  • A dovish Bank of Japan keeps the yen weak and carry-trade funding cheap, supporting leveraged positions in bitcoin and other cryptocurrencies as open interest in futures climbs.
  • If U.S.-Iran talks lead to lower oil prices and reduced inflation pressure in Japan, the central bank will have even less incentive to hike, extending the period in which the yen-funded carry trade can bolster bitcoin.

In this article

BTCBTC$74,329.80◢4.66%

Bitcoin’s breakout past $74,000 on Monday got a helping hand from Japan.

Kazuo Ueda, head of the Bank of Japan, suggested that interest rates are unlikely to rise at the April 28 meeting. He indicated a need for caution, as the situation in Iran and its potential impact on Japan’s economy remain unclear.

Similar decisions have impacted the crypto market before. For example, on August 5, 2024, an unexpected interest rate increase by the Bank of Japan caused a rapid sell-off of borrowed yen, which led to a sharp drop in Bitcoin’s price – from $64,000 to $49,000 in just two days.

The ‘carry trade’ – borrowing money in Japanese yen at low interest rates and investing it in assets like cryptocurrency to earn a higher return – had become a major source of risk in global markets. When traders close out these yen-based positions, it often leads to rapid price drops in riskier investments, and bitcoin and other major cryptocurrencies are usually the first to suffer.

Ueda recently indicated that Japan’s current trade policies will remain unchanged for at least another month. Demand for Japan’s 20-year government bonds was very strong at Tuesday’s auction – the highest since 2019 – with bidders offering 4.82 times the amount available. This is significantly higher than the recent average of 3.27, suggesting that investors believe interest rate increases are likely to stop soon.

Twenty-year yields, near their highest since 1997, fell nine basis points after the auction.

As a crypto investor, I’m watching the Bank of Japan closely. Their continued easy-money policy is keeping the yen really weak – it’s around 160 to the dollar right now. This is actually helping the crypto market because it makes it cheap to borrow yen and invest in things like Bitcoin. A lot of traders are using this, borrowing yen and then using it to amplify their Bitcoin trades with leverage, which is giving the rally a boost. Basically, the BOJ’s actions are fueling a lot of the current price action.

Following the ceasefire, we saw a significant increase in trading activity for both Bitcoin and Ether, with $2.1 billion and $2.2 billion in new open interest respectively. This suggests new investors are taking long positions in these cryptocurrencies. It’s possible some of the funds used for these investments came from the same source of Japanese yen liquidity that Governor Ueda recently worked to maintain.

Japan heavily relies on the Strait of Hormuz for its oil, with over 90% of its oil imports passing through this crucial waterway.

If the U.S. and Iran reach an agreement and oil prices keep dropping, it will likely reduce inflation in Japan. This would give the Bank of Japan even less incentive to raise interest rates and could allow the ‘carry trade’ to continue supporting investments in riskier assets for a longer period.

The Bank of Japan’s cautious approach is another factor helping Bitcoin’s price rise. Bitcoin struggled to break past $73,000 for six weeks because of broader economic challenges – including oil prices, interest rates, and global political issues – which discouraged traders from taking bigger risks.

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2026-04-14 09:10