Today, as expected, Japan’s decision to increase interest rates came early and rates were increased to 0.75. In yesterday’s evaluation, we wrote that the pressure may continue until this decision is announced, but that we are likely to see an increase in the future. Now BTC is above $88 thousand. So what are the expectations for next week? What are the details of the Japanese interest rate decision?
Japan Interest Rate Decision
japan interest rate It has reached a 30-year high and is one step closer to ending the cheap money story. Interest rate decisions of institutions such as the UK or the European Central Bank are not that important for global markets. But Japan is different, they have pumped cheap money into the market for decades, allowing hundreds of billions of dollars to flow into stocks, bonds and even cryptocurrencies.
If Japan continues to increase interest rates rapidly, this will cause a carry trade collapse and hundreds of billions of dollars will return to the country due to increased costs. Because inflation is increasing japan interest rates It had to increase and the path they are on is not a good path for cryptocurrencies. We saw the consequences of concerns about a carry trade collapse for cryptocurrencies during the 2008-09 financial crisis and, more recently, in the summer of 2024.
So is there such a risk today? Not for now, because they purchased $102 billion worth of foreign securities this year, and if interest rates are not increased at the feared rate, things will be fine. Even if inflation starts to fall, this happens simultaneously with the Fed’s relaxation. cryptocurrencies It creates a multiplier effect for Stefan Angrick, head of Japan and frontier economies at Moody’s Analytics, is not in favor of further increases and says it will be difficult for the country.
Following the interest rate hike decision in January, inflation in Japan dropped from 4% to below 3%. The November figure is 2.9%, almost the same as the US. This means that inflation in the country may decrease further after the last interest rate increase and we may see discounts after stabilizing around 2%. So if we start to see the effects of the global disinflation on Japan, the carry trade will remain safe. And yes, another good news: Japan is expected to increase interest rates after 6 months at the earliest because this will be a difficult decision and while inflation has fallen considerably from the level at the beginning of the year, the interest rate has been increased significantly proportionally. The meetings in January, April, July and October in 2026 will be important, as detailed reports for inflation and growth forecasts are shared here, creating a suitable environment for difficult decisions to be announced.
Next Week in Cryptocurrencies
I will share the important developments of the week on Sunday morning, but for now the Japanese FUD wave seems to have calmed down. During the holiday week to take a breather in cryptocurrencies It is possible that we will see an increase. There is a good environment for the liquidity accumulated above to clear perhaps up to $95k following the liquidation of so many longs. The market can evaluate this.
However, you should not immediately get caught up in the bullish psychology of this possible rise, because there is a strong possibility that 2 major negative developments will suppress the crypto in January. Supreme Court tariff cancellation decision and MSCI’s decision crypto reserve companies It has a strong potential to change its classification. These are priced to a certain extent, but it would not be surprising if these issues, which have turned into weapons suitable for overselling in crypto, will bring more pain.
So the outlook for next week is relatively good, but as we get closer to the end of the year, January concerns may start to make themselves felt in the charts.
