I just noticed a pretty interesting phenomenon: recently, Bitcoin has been able to break through the $74,000 mark, and behind this actually lies a very easily overlooked driver—the dovish stance of the Bank of Japan.

Governor Ueda recently sent a clear signal, implying that it’s unlikely they will raise interest rates at the policy meeting at the end of April. This seemingly ordinary statement actually releases a huge amount of pressure on global risk assets. Because once the market’s expectation of a yen rate hike diminishes, the yen will continue to weaken, meaning the cost of carry trades using yen to invest in high-yield assets remains low.

The carry trade mechanism is very key. Investors finance themselves with cheap yen, then invest the money into high-yield assets like Bitcoin and Ethereum. As long as the yen remains weak, this arbitrage can continue. Last week’s data confirmed this: within 24 hours of the ceasefire agreement, open interest in Bitcoin increased by $2.1 billion, and Ethereum added $2.2 billion. Much of this capital is driven by yen carry trades.

There are deep lessons from history. In August 2024, the Bank of Japan unexpectedly raised interest rates, which directly triggered a retreat in carry trades, causing Bitcoin to plummet from $64,000 to $49,000 within 48 hours. The severity of that shock shows how much the BOJ’s policies can impact the crypto market.

Currently, the BOJ continues to maintain a dovish stance, with the yen/USD exchange rate staying close to 160. Ueda stated that this loose liquidity environment will last at least a month. Japan’s 20-year government bond auction on Tuesday also confirmed this expectation, with bid-to-cover ratios reaching their strongest since 2019, indicating institutional capital’s support for a pause in the rate hike cycle.

Even more interestingly, if negotiations between the US and Iran reach an agreement and oil prices continue to fall, Japan’s inflation pressure will further ease. Japan is a highly import-dependent economy, with over 90% of its oil transported through the Strait of Hormuz. Falling oil prices mean the rationale for the BOJ to raise interest rates becomes even less tenable, which keeps carry trade funding costs low and extends the window for Bitcoin to rise.

From a technical perspective, the $73,000 resistance level has been under continuous pressure for six weeks, mainly because of macro headwinds—from oil prices, rate expectations, to geopolitical tensions—all suppressing leveraged traders’ bullish momentum. Now, with the fading of the yen rate hike expectations, a key source of pressure has been removed.

It’s worth noting that MicroStrategy last week bought 535 bitcoins at an average price of $80,340, investing about $43 million. The company’s total Bitcoin expenditure has reached $61.8 billion, with an average cost of around $75,540. This sustained institutional buying, combined with liquidity support from yen carry trades, further strengthens the upward momentum. Currently, Bitcoin is already trading above $81,000.

To sum up the logical chain: Bank of Japan maintains a dovish stance → Yen weakens → Carry trade costs stay low → Leverage capital continues flowing into crypto markets → Bitcoin breaks through previous resistance. As long as the yen rate hike cycle remains delayed, this support will persist. That’s also why every piece of news from the BOJ lately can trigger volatility in the crypto market.