Bitcoin surges as Japan raises rates to 1.25%, highest in 31 years, weakening yen and pressuring yen carry trade unwind.

Hedge funds cut short yen positions to 59,526 contracts after US-Japan intervention, with Bank of Japan rate hike odds at 81% on Polymarket.

Bitcoin at $63151.21 gains as US-Japan Yen pact weakens Dollar, driving money from bonds into BTC price action amid neutral RSI.

Japan and South Korea sold billions of USD overnight to prop up currencies, with US rate checks signaling coordination that could reshape yen carry trade unwind impact on Bitcoin and crypto markets.

Japan 10-Year Yield reaches 2.88% as overstretched indicators signal imminent intervention amid yen carry trade unwind effects on BTC markets.

Yen reaches 160 vs dollar again after $73B defense failure. BOJ set to hike rates June 15-16, pressuring global liquidity and Bitcoin positions funded by cheap yen.

According to @KobeissiLetter, Japanese retail investors reduced net short positions in USDJPY by 561 million between Friday and Tuesday, bringing total net shorts to 2.27 billion, the smallest bearish US Dollar position in at least a year (source: @KobeissiLetter). According to @KobeissiLetter, the positioning shift highlights notable short covering in USDJPY by Japan’s retail cohort, marking a clear reduction in bearish USD sentiment versus JPY over the past year (source: @KobeissiLetter).

According to @KobeissiLetter, the Bank of Japan is offloading its balance sheet as its Japanese government bond holdings fell to about 48% of the outstanding total, the lowest in eight years, down seven percentage points from the 2022 peak, and monthly JGB purchases have been reduced from 5.7 trillion yen.

According to @KobeissiLetter, liquidity in Japan’s government bond market has collapsed as the JGB Liquidity Index jumped to 9.5 on Tuesday, marking the worst liquidity conditions on record (source: @KobeissiLetter). The post adds that the index has doubled over the past 12 months and that stress is unfolding in a roughly $7.6 trillion market, a backdrop that flags higher execution risk for rates strategies and warrants close monitoring of cross-asset liquidity, including FX and crypto risk proxies (source: @KobeissiLetter).

According to @business, a record of discussions from the Bank of Japan’s latest board meeting signaled the next interest rate increase could come as soon as December, matching many market participants’ expectations, source: Bloomberg. For traders, this flags elevated event risk into December for JPY crosses and Japanese rates, with expectations already leaning toward a potential hike as reported by @business, source: Bloomberg.