Bitcoin investors have shown much optimism surrounding President Trump’s January 20 inauguration, but the Bank of Japan’s (BoJ) upcoming rate hike decision could throw a wrench into crypto’s rally. Scheduled for January 24, the BoJ meeting is already creating worries, with markets pricing in a 90% chance of a rate hike, according to Bloomberg data shared by analyst Michael Kramer on X.
Stay Ahead of the Market:
- Discover outperforming stocks and invest smarter with Top Smart Score Stocks
- Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener
BoJ Rate Hike Could Spark Volatility
Japan’s inflation is heating up, hitting 2.9% year-over-year—a three-month high. An inflation report on January 23, just a day before the BoJ’s decision, could further stoke fears. The central bank has already raised rates twice in 2024, breaking its long-standing negative rate stance, and the implied rate for this meeting is 0.45%.
Crypto traders haven’t forgotten August 2024, when a BoJ rate hike triggered a Yen carry trade unwind, causing Bitcoin to plunge to $49,000. With the Japanese Yen now at its strongest level against the U.S. dollar since December, traders are bracing for another potential selloff.
Dollar Index Mimics Trump-Era Pattern
Interestingly, the U.S. Dollar Index (DXY) mirrors its performance during Trump’s first term, rallying sharply before his inauguration. If history repeats, the dollar could cool post-inauguration, offering relief to risk assets like Bitcoin.
For now, everyone’s looking ahead to January 24, as Bitcoin bulls brace for the Bank of Japan’s big rate hike decision and the turbulence it might bring.
At the time of writing, Bitcoin is sitting at $97,591.96.
