Market Data 
Bitcoin’s breakout past $74,000 on Monday got a helping hand from Japan.
Bank of Japan Governor Kazuo Ueda cooled expectations for an interest rate hike at the upcoming April 28 policy meeting, signaling a more cautious stance amid uncertainty over how the Iran war will affect Japan’s economy.
Such decisions have shown to spillover to the crypto market in previous years. On August 5, 2024, a surprise BOJ rate hike triggered a yen carry trade unwind that crashed bitcoin from $64,000 to $49,000 in 48 hours.
The carry trade, where investors borrow cheaply in yen and deploy into higher-yielding assets including crypto, had become one of the largest sources of leveraged risk-asset exposure globally. A yen unwind tends to cause quick sell-offs in risk assets, with bitcoin and major cryptocurrencies the first to be hit.
But Ueda just signaled that trade stays intact for at least another month. Japan’s 20-year bond auction on Tuesday drew its strongest demand since 2019, with a bid-to-cover ratio of 4.82 against a 12-month average of 3.27, confirming that institutional capital agrees the hiking cycle is pausing.
Twenty-year yields, near their highest since 1997, fell nine basis points after the auction.
A dovish BOJ keeps the yen weak, currently near 160 against the dollar. A weak yen keeps carry trade funding cheap. Cheap carry funding supports leveraged positions across risk assets, including the perpetual futures markets where bitcoin’s rally is being built.
Data from last week showed $2.1 billion in new bitcoin open interest and $2.2 billion in ether open interest in 24 hours following the ceasefire, with coin-denominated OI confirming net new longs. Some portion of that positioning maybe funded, directly or indirectly, by the same yen liquidity that Ueda just preserved.
Japan is also among the economies most exposed to the Strait of Hormuz, through which more than 90% of its oil imports flow.
If U.S.-Iran talks produce a deal and oil prices continue falling, Japan’s inflation pressure eases further, giving the BOJ even less reason to hike and extending the window in which the carry trade supports risk assets.
As such, the BOJ’s caution is one more tailwind behind bitcoin’s breakout. The $73,000 ceiling held for six weeks partly because macro headwinds, from oil to rates to geopolitics, gave leveraged traders no reason to push through it.
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