What’s Next for Bitcoin and Altcoins As BoJ Hikes Rate to 17-Year High

In tune with the market expectations, the Bank of Japan (BoJ) has announced another 25 basis points interest rate hike taking it to 0.5%. Japan is seeing this interest rate level for the first time in 17 years after the 2008 financial crisis. It seems that the market has already factored in the news beforehand as the Bitcoin price, along with top altcoins, seems to be heading north by 2-4%. Additionally, the U.S. dollar Index (DXY) is down which could bode well for BTC and crypto.

How Will Bank of Japan Rate Hike Impact Bitcoin?

With the BoJ announcing a 25 basis points rate hike, the Japanese Yen has gained strength over the USD in the early trading hours of the Asian market. As said, Japan is seeing 0.5% interest rate for the first time since the 2008 financial crisis.

The recent rate hike from BoJ comes as Japan’s Consumer Price Index (CPI) for the latest period came in at 3.6%, surpassing market expectations of 3.4% and up from the previous reading of 2.9%. Thus, the data clearly signals growing inflationary pressures in the Japanese economy.

BOJ Rate Hike To Trigger Yen Carry Trade Unwinding?

Last year in July end, the Bank of Japan’s rate hike decision stirred major panic in the global market with Bitcoin and altcoins collapsing on fears of Yen carry trade unwinding. The Yen carry trade unwind usually occurs when investors sell off assets purchased using borrowed yen, while reversing its initial trade strategy.

Alex Kruger said that this time the fears of Yen carry trade unwinding are very less amid increased volatility in global markets which diminishes the profitability and appeal of the yen carry trade. As a result, very few will participate in leveraged carry strategies. Adding further he wrote:

“The Bank of Japan’s actions hold less significance now compared to 2024. BoJ rate hike is largely irrelevant outside of Japan. USDJPY barely moving confirms this. Think of it this way. The yen carry trade was largely unwound in 2024, and positioning is far from fully re-established”.

BTC Rally Ahead As US Dollar Index Slips?

The US Dollar Index (DXY) appears to have reached a significant peak at 110.18, signaling a possible major top. Today’s low suggests the potential for a substantial decline in the index moving forward.

If Bitcoin’s inverse correlation with the DXY holds, this could mark a bullish period for the cryptocurrency, paving the way for what some analysts describe as a “golden time” for BTC. As of press time, the BTC price is trading 2.69% up at $104,624 with daily trading volumes jumping 76% to more than $101 billion.

Although Bitcoin eyes fresh all-time high, the price action remains largely range bound between $101K-$106K. As shown below, BTC first needs to break the $106K level to trigger a rally to fresh all-time highs of $110K and beyond.

Altcoins Gaining Momentum

Unlike the crypto market crash last July’s Yen carry trade unwinding, altcoins are showing strength this time with Ethereum price (ETH) up 4.34% shooting to $3,348 levels despite the BoJ rate hike. Similarly, Solana (SOL), Cardano (ADA), Tron (TRX), and Chainlink (LINK) are also up by 4% as of press time.

Furthermore, with Donald Trump signing the executive order to build a ‘digital asset’ stockpile, hopes of a fresh altseason are reviving once again. Popular crypto analyst Crypto Rover noted:

“Trump is the bullish catalyst for Altcoin season. The Bitcoin dominance will crash. After that, daily Altcoin gains of 20-25% will become the norm again”.

The Altseason Index is once again up above 50 showing signs of growing market optimism. It will be interesting to see whether top altcoins like XRP, ETH, SOL will lead the charge once again.