This week, global financial markets are facing a rare “central-bank chain reaction.”
The Federal Reserve has just raised interest rates by 25 basis points, lifting the federal funds target range to 3.75%–4.00%. Attention is now immediately shifting to the Bank of Japan. The BOJ will hold its monetary policy meeting from September 17 to 18, and the market broadly expects it to raise its policy rate from 1.00% to 1.25%, marking the highest level in roughly 31 years.
Here is the big question: If the Feds rate hike is already painful enough for BTC, why could a BOJ rate hike pose an even greater risk？
The answer may lie in a term that many crypto investors are unfamiliar with — the Japanese yen Carry Trade.
1. Fed Rate Hikes Target “Dollar Liquidity”
The logic behind a Fed rate hike is relatively straightforward:
Higher interest rates → higher returns on dollar-denominated assets → cash and U.S. Treasuries become more attractive → valuations of risk assets such as stocks and BTC come under pressure.
Moreover, the market has already largely priced in this Fed rate hike. What really matters now is the forward guidance signaled by the new Fed Chair, Waller.
If the market interprets this hike as merely a form of “policy normalization” with limited room for further increases, the negative impact could turn into a classic “buy the rumor, sell the news” scenario.
But if markets conclude that the Fed may continue raising rates, the dollar and Treasury yields could move higher, putting significantly more pressure on BTC.
The situation is further complicated by continued uncertainty surrounding oil prices, geopolitical risks, and inflation, while the overall monetary-policy environment across major global central banks remains relatively tight.
2. The Real Danger of a BOJ Rate Hike: It Could Affect the “Pipes” Carrying Global Capital
For decades, Japan maintained extremely low interest rates. This encouraged global investors to build a classic trade:
Borrow cheap yen → convert them into dollars and other currencies → invest in U.S. stocks, Treasuries, gold, BTC, and other higher-yielding assets.
This is known as the Japanese yen Carry Trade.
You can think of the yen as a form of “low-cost fuel” for global financial markets.
Now, as the BOJ begins raising rates, the transmission mechanism changes:
Higher yen funding costs → stronger yen → lower Carry Trade returns → investors unwind positions → overseas risk assets are sold → capital flows back into Japan.
That is fundamentally different from simply saying “the BOJ raised rates by 25 basis points.”
Japans Interest Rates Over the Past Decade (Source: TradingView)
The yen has recently appreciated significantly. In early September, it rose by roughly 4.5% in a single week, and the market had already begun to see early signs of Carry Trade unwinding. Reuters, citing analysts, reported that as of March this year, the scale of cross-border borrowing related to the yen had reached approximately ¥360 trillion, the highest level in the past 30 years.
In other words, the real danger posed by the BOJ is not simply “raising rates,” but the possibility of triggering a repricing of global leveraged capital.
3. Why Is This Particularly Worth Watching This Time？
Because the global macroeconomic environment in 2026 is already challenging.
The United States has just raised interest rates.
Japan is preparing to raise rates.
The European Central Bank has also shifted toward a more hawkish stance.
At the same time, geopolitical tensions in the Middle East have kept oil prices elevated, while higher energy costs are adding further pressure to global inflation.
This means global capital could simultaneously face:
Higher dollar funding costs + higher yen funding costs.
If the Fed raises rates alone, the main impact is a repricing of dollar-denominated assets. But if Japan also raises rates and pushes the yen higher, it could trigger a broader chain reaction:
Carry Trade unwinding → global risk-asset deleveraging → BTC decline → accelerated losses in altcoins.
A similar episode of severe global market volatility occurred after the BOJ raised rates in August 2024. This is why the market is now concerned about “history repeating itself.”
However, compared with 2024, the market is already aware that Japan may raise rates this time. Therefore, whether a severe liquidation wave occurs will ultimately depend on the gap between actual policy decisions and market expectations.
4. What Is the BOJ Most Likely to Do on September 18？
The prevailing market expectation is a 25-basis-point rate hike, taking the policy rate from 1.00% to 1.25%.
Compared with an aggressive 50-basis-point move, 25 basis points would be more consistent with current market expectations. Reuters previously reported that there was no clear indication of strong internal support at the BOJ for suddenly delivering a 50-basis-point hike at this meeting.
So, 1.25% itself may not be particularly frightening.
What really matters is what Kazuo Ueda says after the meeting.
If he says something along the lines of:
“We will continue to monitor economic and inflation data.”
the market may interpret the decision as a case of “the negative news being priced in.”
But if he sends a clearly hawkish signal that:
“There is still room for further rate hikes.”
then the market will no longer be trading around 1.25%.
Instead, it will begin pricing in:
1.50% → 1.75% → or even higher.
That is what could potentially trigger an accelerated unwinding of the yen Carry Trade.
5. BTC in the Short Term: $75,000 Is a Key Level to Watch
BTC has already fallen from around $82,000 to the $75,000–$76,000 area.
At the same time, the U.S. Senates earlier failure to advance the CLARITY Act has added further pressure to the crypto market.
BTC is therefore facing three simultaneous sources of pressure:
- Disappointment over U.S. crypto-regulation expectations
- A hawkish Federal Reserve
- A potential BOJ rate hike
If the BOJ simply delivers a standard 25-basis-point hike and Uedas comments are relatively dovish, BTC could follow a familiar pattern:
Initial decline → negative news priced in → rebound.
But if the BOJ turns significantly more hawkish while the yen appreciates rapidly, BTC needs to be watched closely for:
Break below $75,000 → around $72,000 → potential test of the $70,000 area.
These are not predetermined targets. They are simply the key price zones the market should be watching under the current conditions.
6. Medium to Long Term: BTC May Not Be Bearish, but Altcoins Require More Caution
If the next few months bring a combination of:
Fed rate hikes approaching their end + BOJ tightening gradually being priced in + a slowdown in yen appreciation + improving global liquidity,
BTC could potentially enter a period of range-building and bottom formation, or even resume an upward trend.
Once BTC stabilizes, capital typically tends to rotate in stages:
BTC → ETH → large-cap altcoins → mid/small-cap altcoins → Meme coins.
Conversely, if Japan enters a prolonged tightening cycle, the yen continues to appreciate, and the Carry Trade keeps contracting, the market structure could move in the opposite direction:
BTC relatively resilient → greater pressure on ETH → broader weakness across altcoins → highest risk concentrated in small-cap alts and Meme coins.
The reason is simple:
BTC has the deepest liquidity and the highest level of institutional participation.
Many altcoins, by contrast, depend heavily on sentiment, leverage, and short-term capital. Once the market enters Risk-off mode, capital can exit these assets much faster.
7. What Really Matters Is Not Just the Price of BTC
Crypto investors should not focus solely on the candlestick chart. There are four key indicators worth monitoring closely.
First: USD/JPY
If USD/JPY falls rapidly, it means the yen is appreciating quickly, which could indicate that the Carry Trade is contracting.
Second: U.S. 10-Year Treasury Yield
If Treasury yields continue rising, the cost of capital for global risk assets is also increasing.
Third: BTC Spot ETF Flows
If BTC declines while spot ETFs continue recording inflows, it would indicate that there is still relatively strong demand for spot BTC.
Fourth: Whether BTC Can Hold Key Support Levels
If macroeconomic headwinds continue to pile up but BTC manages to hold key support levels, it could indicate that the market is undergoing a process of position and liquidity rotation.
Conversely, if the yen surges, Treasury yields rise, ETF flows turn negative, and BTC breaks below key support, investors should be alert to the possibility of risk spreading further into altcoins.
Conclusion: The BOJs Real “Bomb” Is Not 1.25%
So, on September 18, the most important question is not simply:
“Will the BOJ raise rates by 25 basis points？”
The more important question is:
“Is the BOJ telling global markets that the era of cheap yen is truly coming to an end？”
A Fed rate hike primarily affects dollar liquidity.
A BOJ rate hike, meanwhile, could affect the global Carry Trade.
That is why, under the current circumstances, a seemingly modest 25-basis-point BOJ rate hike could theoretically generate a market impact far greater than the number itself suggests.
For BTC, the biggest short-term risk is global deleveraging triggered by yen appreciation.
For altcoins, the bigger danger is a second wave of liquidity-driven selling after a BTC decline.
Therefore, after September 18, the markets key question should not be “Which coin will surge？”
It should be something more fundamental:
Will the yen continue to appreciate？
If the yen stops appreciating, the Carry Trade stabilizes, and the Fed gradually approaches the end of its tightening cycle, BTC could enter a new window for a rebound.
But if the yen continues appreciating while global interest rates remain elevated, the current period of BTC consolidation may not yet be over.
This time, the asset investors may need to watch most closely may not be BTC itself, but the Bank of Japan — and the Japanese yen.