Bitcoin watches what will happen this Friday in Japan

Source: Criptonoticias Original Title: Bitcoin Watches What Will Happen This Friday in Japan Original Link: https://www.criptonoticias.com/mercados/bitcoin-atento-ocurrira-viernes-japon/ The focus is on the final announcement of the Bank of Japan (BoJ) meeting. The market projects that the Bank of Japan will not announce changes to the interest rate.

Bitcoin (BTC) is struggling to recover the $90,000 level ahead of a key event in the macroeconomic calendar. This Friday, the Bank of Japan (BoJ) will announce its monetary policy decisions.

So far, market consensus is that there will be no substantial changes and the interest rate will remain at 0.75%, its highest level since 1995. However, investors will be paying close attention to the message from Kazuo Ueda, governor of the BoJ, after the meeting on January 23.

Specifically, investors are looking for signals on how the Japanese entity will balance the weakness of the yen, avoiding risks of pushing bond yields higher. This is in a scenario where fiscal and monetary tensions are increasing.

On the other hand, political signals are also gaining importance: proposals for higher spending and tax cuts increase the likelihood of an inflationary spike, which could force a faster adjustment of rates.

However, the economy’s fragility and the historically cautious stance of the BoJ keep the debate open, leaving the market divided between the possibility of maintaining low rates and a potential more restrictive shift.

Some officials at the Bank of Japan see room to accelerate rate hikes. They point to April as a concrete possibility, despite the market consensus pointing to July.

The yen has depreciated by about 8% since October, while the 10-year Japanese bond yield reached levels not seen in nearly three decades. Both factors reinforce expectations that the Bank of Japan may be forced to accelerate monetary tightening if inflation continues to gain momentum.

Bitcoin follows the development of events

Why is what happens in Japan important for Bitcoin? The situation of the Japanese economy reinforces a scenario of global uncertainty and lower risk appetite.

If more restrictive signals emerge from the BoJ, it would imply a tightening of financial conditions in one of the economies that has historically maintained ultra-expansive policies. In case of restrictions, the following scenario can be expected:

• Yen strengthening
• Rise in sovereign bond yields
• Reduced liquidity

All these factors pressure risk assets, such as BTC. Additionally, the increase in Japanese bond yields reduces Bitcoin’s relative attractiveness as an alternative store of value, as it offers more competitive real returns in traditional instruments.

In an environment where central banks signal prioritizing monetary stability over stimulus, investors tend to reduce exposure to cryptocurrencies. This fact is one of the reasons why BTC struggles to recover key levels like $90,000.

Currently, the coin is trading at $89,500, about 29% below its all-time high (ATH) of $126,000.

On the other hand, it’s important to highlight that Japan is key in the global “carry trade” thanks to its historically low interest rates. A situation that for years encouraged investors to borrow in yen to invest that capital in higher-yield assets.

If Japanese bond yields rise again, that strategy is likely to reverse, leading to closing positions and less available liquidity.

This process usually negatively impacts higher-risk and more volatile assets, such as stocks and cryptocurrencies.