Japan's central bank cools rate hike expectations, removing a key risk for bitcoin's rally

The BOJ's dovish shift keeps the yen carry trade alive, the same trade whose unwind crashed bitcoin 24% in two days in August 2024. 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.