June 16, 2026. The Bank of Japan raised its policy interest rate from 0.75% to 1%. With a 7 to 1 vote. The highest level since 1995. Thirty-one years.

And Bitcoin hardly reacted at all.
This is as important as the story itself.
Because when looking at history, the picture appears very different. After the first increase in March 2024, Bitcoin fell 18%. In July 2024, down 30%. In January 2025, down 31%. In December 2025, down 32%. An average 27% decline with each increase. And now, a similar-sized increase occurred, the price stayed around $66,000, briefly dropped 2% in the short term, then recovered.
Why was this time different? There are four reasons, and all four deserve understanding.
First is pricing. Previous increases were either surprises or semi-surprises. This increase was priced in by the market with a 98% probability. Out of 49 economists, 51 expected a hike. Polymarket was almost certain. The expected bad news hits as hard as unexpected bad news. The market had digested this weeks in advance.
Second, leverage had already been cleared. In the past 13 days, $225B flowed out of Bitcoin ETFs. Large liquidation waves occurred in previous weeks. Before the increase, market leverage was largely unwound. No positions remained to be squeezed.
Third is the BOJ balancing move. While raising rates, the BOJ also announced it would pause its bond purchase reduction program starting April 2027. This, on one hand, makes money more expensive, while on the other, slows long-term liquidity withdrawal. The market interpreted this as a hawkish hike offset by dovish signals. Bitcoin experienced $2.02T in short liquidations the same day, meaning those betting on a decline were wrong on this balancing news.
Fourth is that real interest rates are still negative. With a 1% policy rate and a 2.8% core inflation, Japan’s real interest rate remains negative. This does not mean the carry trade has completely collapsed.
Now, let’s delve deeper into the carry trade issue.
Japan has lent at near-zero or negative interest rates for decades. In this environment, investors from around the world borrowed cheaply in yen. They moved these yen into higher-yielding assets. U.S. Treasury bonds, stocks, and crypto.
How big is this trade? Japan is the largest foreign holder of U.S. Treasury securities. A stock of $1.24 trillion. A significant part of this is financed by cheap yen borrowing. Global hedge funds’ yen short positions as of June 2026 are near a nine-year high, around 145,000 contracts.
What happens when these positions are closed? Investors buy yen, sell high-yield assets. This selling pressure impacts stocks, bonds, and crypto. Bitcoin’s 24/7 trading and deep derivatives market cause this effect to be reflected in other assets first.
But right now, the carry trade dynamic is working differently than in previous increases.
USD/JPY remains between 159 and 160. The yen has not strengthened despite the 1% interest rate. Why? Because the Fed is holding at 3.75%. The interest rate differential between the U.S. and Japan is still very large. Until this gap narrows, the pressure to unwind carry trades remains limited.
Historically, a disruptive unwind of carry trades occurs when two conditions happen simultaneously: the yen sharply appreciates and markets are full of leverage. August 2024 saw exactly this scenario. The yen gained 8% in a week, and Bitcoin dropped from 65,000 to 49,000. Currently, neither the yen has moved that sharply nor is leverage that intense.
But the danger has not passed.
One thing analysts point out is that the actual effects of BOJ hikes often appear weeks later, not on the news day. Because carry trade positions don’t unwind immediately. They gradually, step by step, unwind. And this process of unwinding manifests as a delayed but persistent selling pressure in the market.
The Nikkei 225 rose above 70,000 after this increase. This strong reaction is significant. Japanese stocks interpreted the BOJ’s hike as a sign of economic normalization. This suggests the market sees Japan’s structural recovery more than a carry trade concern.
The impact on the global economy can be summarized as follows:
The BOJ hike marginally tightens global liquidity conditions. Yen borrowing costs increase. This slows the expansion of carry trades. Some of the money flowing from Japan into U.S. Treasuries may start returning. This pushes up U.S. Treasury yields and puts pressure on the dollar. If the dollar strengthens, additional pressure builds on real assets and crypto.
But this effect is directly linked to the Fed cycle. If the Fed raises rates in 2026, as indicated by the dot plot, and the U.S.-Japan interest differential narrows, the unwind of carry trades accelerates. This is the most critical scenario.
Oil plays a balancing role in this equation. With the Strait of Hormuz opening, oil prices fell below $81. This reduces energy inflation. When energy costs decline, inflation pressures in both Japan and the U.S. ease. This could mean both central banks can tighten less.
What do I take away from all this?
In the short term, the impact of the BOJ’s hike has been more limited than expected. That’s good. But history shows: the real effect doesn’t happen immediately. Carry trade positions unwind gradually. Over the next 4 to 8 weeks, we need to monitor yen movements. If USD/JPY drops below 155, it indicates an accelerated unwind of carry trades. In that scenario, risk assets could face renewed sharp pressure.
In the medium term, two central banks are tightening simultaneously. The BOJ at 1%. The Fed at 3.75%, signaling further hikes. This pushes global liquidity conditions to their tightest since early 2024.
But at the same time, oil prices are falling, the Iran deal holds, trade war risks have diminished, on-chain accumulation continues, and the CLARITY Act is imminent.
Amid these conflicting pressures, markets are searching for direction. I am too.
My positions are open on Gate. Sizes are aligned with my plan. I am watching yen movements, oil data, and July’s CPI.
I am prepared.
#MyGateTradeStory $USDJPY $JPN225 $GBPJPY

⚠️ Not financial advice.