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Analysts at XWIN Research Japan noted that the Bitcoin market has encountered a new source of short-term pressure amid expectations of a change in Bank of Japan policy. Investors are increasingly anticipating the regulator's departure from its ultra-loose measures, creating uncertainty in the cryptocurrency market.
Market Pressure
Researchers emphasized that local government bond yields have approached multi-year highs, increasing market participants' focus on global liquidity. Under these conditions, cryptocurrencies, including Bitcoin, have become more sensitive to changes. Tougher rhetoric from the Bank of Japan traditionally supports the yen (JPY), which, in turn, leads to a curtailment of carry trades. These trades have long fueled demand for risky assets, and during periods of yen strengthening, investors begin to reduce leverage.
Short-Term Bitcoin Selling
Bitcoin (BTC) often comes under short-term selling pressure in such conditions. For example, on January 24, 2025, the Bank of Japan raised its key interest rate from 0.25% to 0.5%. Following this decision, on-chain data recorded an increase in net BTC inflows to centralized exchanges, indicating preparations for a sell-off. Some investors chose to reduce their positions in anticipation of potential macroeconomic risks.
Shift in Derivatives Market Sentiment
"Derivatives markets also reflected the shift in sentiment. Funding rates declined and briefly approached negative values. This indicates the dominance of short positions. Market participants were pricing in a price decline. The reaction demonstrated the high sensitivity of futures to signals of tightening liquidity," analysts stated.
Long-Term Outlook
Despite short-term pressure, experts do not believe the current situation is the beginning of a long-term bearish trend. According to them, the rate hike was expected, and the interest rate differential between Japan and the US remains significant. This reduces the risk of a sharp reversal in global capital flows. The main influence on the market was exerted by changes in investor positioning.
The Impact of the Yen Exchange Rate
Experts also note that the yen exchange rate itself is not considered a key factor for Bitcoin. Liquidity dynamics and overall sentiment in financial markets are far more important. Amid uncertainty and changes in monetary policy, investors will closely monitor signals that could influence their decisions to buy or sell cryptocurrency.
In Conclusion
Thus, the short-term pressure on the Bitcoin market caused by the Bank of Japan's policy changes highlights the importance of monitoring global economic factors. Investors should be prepared for possible price fluctuations and consider the impact of macroeconomic changes on their investment strategies.
