The Bank of Japan is rumored to lean towards 'not raising rates' next week, and the space for yen carry trades continues. Can Bitcoin continue to rise?

The Bank of Japan will hold a monetary policy meeting next week, and it is rumored that it may lean towards maintaining interest rates rather than raising them again. Against this backdrop, inflation in the United States has risen for the second consecutive month, and the long-term trend of interest rate cuts by the Federal Reserve may slow down. This means that the space for yen carry trades is likely to continue, and the cryptocurrency market still has bullish potential in the short term. (Background: Japan's economy is too strong! Experts estimate a probability of over 50% for a rate hike in December. 'If the US cuts and Japan raises,' be careful of a wave of yen carry trade unwinding) (Background: The effect of Japan's interest rate hike) Zombie companies are collapsing: This year, the number of bankruptcies has exceeded 5,000, with liabilities reaching 1.38 trillion yen.) The Bank of Japan will hold a monetary policy meeting from the 18th to the 19th, during which nine members of the monetary committee will consider whether to raise interest rates from 0.25%. However, according to Reuters reports, five sources indicate that the Bank of Japan leans towards maintaining interest rates unchanged, as policymakers wish to take more time to examine overseas risks and clues regarding next year's wage outlook. The report mentions that there has not yet been a consensus on the final decision within the Bank of Japan, as some monetary committee members believe that Japan has met the conditions for a rate hike in December, while others believe that the rebound of the yen has eased price pressures and that the Bank of Japan is not in a hurry to raise rates. Originally, according to a Reuters survey last month, more than half of economists expected the Bank of Japan to raise rates this month, and about 90% of respondents predicted that by the end of March next year, the Bank of Japan would raise rates to 0.5%. However, the market currently expects the probability of a rate hike in December to be less than 30%. Sources indicate that as the economy grows moderately, wages steadily rise, and inflation has exceeded the 2% target for over two years, the Bank of Japan is increasingly confident that conditions for further rate hikes are gradually forming, and it may maintain its confidence in the economic outlook, continuing to believe that consumption trends are growing moderately. However, the urgency for a rate hike is currently low, as the recent rebound of the yen has reduced inflationary pressures from imported raw materials, contrasting with the situation in July when rates were raised to 0.25%, during which the yen rapidly depreciated, pushing up import prices and increasing the risk of inflation exceeding expectations. The Federal Reserve is expected to cut rates by 25 basis points this month, while the Bank of Japan leans towards not raising rates this month. The Federal Reserve will also announce its latest interest rate decision at 2 AM Taiwan time on the 19th. Data released in the US on the 11th showed that the Consumer Price Index (CPI) for November increased by 0.3% month-on-month and 2.7% year-on-year, fully aligning with market expectations. Although inflation data has accelerated compared to last month, the market believes it is still insufficient to prevent the Federal Reserve from cutting rates in this meeting. According to CME’s FedWatch tool, the market expects a 98.6% probability that the Federal Reserve will cut rates by 25 basis points at next week’s meeting. However, as the inflation situation in the US has risen for the second consecutive month, the Federal Reserve's interest rate decision may become more complicated, and the long-term trend of rate cuts may slow down. This means that yen carry trades may still have attractive space. Is there still bullish potential in the cryptocurrency market in the short term? Experts analyze that the current macroeconomic situation allows Bitcoin to continue maintaining its carry trade potential against the yen, returning to $100,000. If Japan continues not to raise rates and the US continues to maintain the status quo of long-term inflation uncertainty, the cryptocurrency market still has bullish potential in the short term. However, investors should still pay attention to the drastic changes in macroeconomic policies between Japan and the US; as long as the carry trade space disappears, the wave of yen carry trade unwinding seen in early August may happen again, impacting the global financial market. The Bank of Japan decided to raise rates by 15 basis points at the end of July this year, coupled with the Federal Reserve's readiness to cut rates at that time, causing the yen to soar and compressing the profit space for 'borrowing low-interest yen and buying high-interest currencies' carry trades, leading to a massive number of investors unwinding positions, impacting the global stock and cryptocurrency markets, which suffered a significant crash in early August. Related reports: Japan's CPI exceeds expectations; will there be a rate hike in December? Beware of hot money exiting yen carry trades, reminiscent of the August stock market crash. Bloomberg warns: $4 trillion yen carry trades are unwinding; the stock market's hidden risks cannot be ignored. Bitcoin surged above $58,000 and then plummeted! Wall Street warns: the yen carry trade unwinding is not over, and the BOJ's rate hike may trigger another stock market crash. "The Bank of Japan is rumored to lean towards 'not raising rates' next week, and the space for yen carry trades continues. Can Bitcoin continue to rise?" This article was first published on BlockTempo (the most influential blockchain news media).