The Bank of Japan held its policy rate at 1% during its July meeting, after raising it in June to its highest level since 1995. The central bank accompanied this pause with hawkish signals, upgrading growth projections and indicating that further rate hikes remain possible. The yen carry trade mechanism directly links Japanese monetary policy to crypto volatility: when the BOJ raises rates, positions borrowed in yen become more expensive, triggering sales of risk assets like Bitcoin. Previous BOJ rate hikes have coincided with Bitcoin corrections ranging from 18% to 32%. For crypto investors, monitoring the USD/JPY exchange rate and BOJ communications remains essential.
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