Most investors are focused on the inauguration of President Trump on January 20, which has the potential to be a main catalyst for bitcoin (BTC) and cryptocurrency prices.
However, a few days later, there is a potential rate hike on cards from the Bank of Japan (BoJ). According to a Bloomberg chart shared by the analyst Michael Kramer in Xthe market is currently considering a 90% chance of a rate hike on January 24.
Previously, BoJ rate hikes caused confusion in both traditional and digital assets markets. This is a major catalyst for Yen carry trade unwind at the beginning of August, which sent bitcoin crashing to $49,000. Traders are probably bracing for another selloff this time.
Since 2016, the BoJ has maintained negative interest rates; however, in 2024, they raised interest rates twice, from -0.1% to 0.25%. The implied meeting attendance rate is 0.45%; however, this could change dramatically as Japan has an inflation report the day before, on January 23.
Headline inflation year-over-year was at 2.9%, the highest since August. A hotter than expected inflation print could create fears within the market, and another iteration of the Yen carry trade unwind could be on course.
Even with the impressive strength of the DXY index, which is currently above 109, the highest level since November 2022, it jumped from 100 from the low in September.
The DXY index is following a similar trajectory to the first term of Donald Trump’s presidency, which saw a rally in the DXY leading up to his inauguration and then a sharp fall, giving risk assets a much-needed boost. The DXY index measures the value of the US dollar against a basket of major foreign currencies.
The Japanese Yen is at its strongest level against the dollar since December 16, at 156.
Read more: Bank of Japan Governor Hints at More Rate Hikes; BTC is down 0.4%
