Bitcoin News Today: Bitcoin Holds Ground as BOJ Triggers Carry Trade Unwinding, Alts Plunge

The Bank of Japan raised its interest rate to 0.75%, the highest level in 30 years, signaling a shift away from ultra-loose monetary policy and increased borrowing costs. This move follows strong inflation and wage growth in Japan, with the central bank indicating more hikes may come as economic conditions evolve. The rate increase has drawn attention for its potential impact on global financial markets, particularly crypto assets that have long relied on cheap liquidity.

Bitcoin, which had already been under pressure amid rising rates elsewhere, showed unexpected resilience in the wake of the BOJ's announcement, holding firm despite expectations of a sharp selloff.

Meanwhile, altcoins like Solana and XRP struggled, with some tokens falling as much as 20% in just a few days. Analysts noted a divergence in how different parts of the crypto market are responding to the tightening of Japanese monetary policy.

Bitcoin ETFs, on the other hand, saw a significant inflow of $457 million, indicating institutional confidence despite the broader market's volatility. This capital shift suggests some investors are positioning for a potential recovery in Bitcoin, even as altcoins face a prolonged liquidity squeeze. Market data also revealed bearish sentiment on social platforms, with pessimistic commentary dominating conversations about the near-term outlook.

Impact on Global Carry Trades and Crypto Markets

The BOJ's decision to raise rates has significant implications for global carry trades, which rely on borrowing in low-interest currencies like the yen and investing in higher-yielding assets. With Japan ending decades of ultra-low rates, these trades could unwind, reducing the flow of liquidity into risk assets such as Bitcoin and Ethereum according to analysts. Analysts warn that this unwinding could increase volatility and pressure crypto prices as investors rebalance their portfolios.

The yen weakened slightly in the immediate aftermath of the rate hike, falling more than 0.3% against the U.S. dollar. The 10-year Japanese government bond yield rose to 2.0%, the highest since 2006, signaling a shift in investor expectations. While the BOJ expects further tightening, Governor Kazuo Ueda emphasized that the central bank would adjust its policy based on real-time economic data and evolving risks.

For crypto investors, the tightening of Japanese monetary policy introduces a new variable in an already volatile market. Japan has long been a source of cheap money for global investors, and the shift away from that dynamic could tighten liquidity on a global scale. Bitcoin's ability to hold its price in the wake of the BOJ's move has surprised some, but altcoins remain vulnerable to further declines if rates continue to rise.

As the crypto market digests the BOJ's move, investors are closely watching how global liquidity adjusts to Japan's new monetary stance. While Bitcoin has held up so far, the coming weeks will be critical in determining whether this resilience is sustained or if the broader market will follow altcoins into further correction.