Bitcoin rallies after BOJ’s 1.25% hike, but the real yen-carry test starts next week

According to CryptoSlate, Bitcoin rallied following the Bank of Japan's decision to lift its policy-rate target to about 1.25% by a 7–2 vote. The new rate target takes effect on Sept. 24, separating the scheduled funding-cost change from the initial market reaction.

Following the announcement, the yen weakened rather than appreciating, running counter to the typical pattern of a carry-trade unwind. Reuters reported that the dollar climbed to a two-week high of 157.84 yen during Governor Kazuo Ueda’s press conference, leaving the Japanese currency 1.2% weaker. Coinbase data showed Bitcoin trading at $76,961 at the release time and rising to reach as high as $81,000 intraday.

While the initial reaction showed limited immediate unwind pressure, longer-term risks remain as the new rate is implemented and the BOJ ties future increases to its economic and inflation outlook. Coinbase Institutional noted that yen funding is one transmission channel among several, and a stronger warning of unwind pressure would involve sharp yen appreciation alongside falling risk assets.