The Bank of Japan's interest rate hike has backfired: the yen hits an all-time low, and the sustainability of the Bitcoin rebound is in doubt.

The Bank of Japan recently announced an increase in the benchmark interest rate to the highest level in nearly 30 years, but the market reaction was unexpected. After the announcement of the rate hike decision, the yen not only failed to strengthen but also experienced rapid depreciation, hitting new temporary lows against the US dollar, euro, and Swiss franc. This trend forced the Japanese government to make an urgent statement, stating that it would take “appropriate measures” to address excessive and one-sided fluctuations in the forex market.

Data shows that the USD/JPY once rose to around 157.67, while the EUR/JPY and CHF/JPY respectively reached 184.90 and 198.08. Japanese Ministry of Finance officials warned that if the USD/JPY approaches the 160 level further, the likelihood of official intervention will significantly increase. The yen continues to weaken, clearly deviating from the original intention of the Bank of Japan's interest rate hike policy aimed at stabilizing the exchange rate.

Against the backdrop of severe fluctuations in the forex market, Bitcoin prices have shown a slight rebound, sparking discussions among some investors on the topic of “the depreciation of the yen being beneficial for Bitcoin.” As of now, the price of Bitcoin is approximately $88,949, with an intraday increase of about 1%. Despite the short-term recovery, the weekly performance still remains in a state of fluctuation. Some analysts believe that this round of increase resembles a technical rebound driven more by sentiment rather than a trend reversal.

The divergence in the market regarding the outlook for Bitcoin prices centers on whether Japanese authorities will directly intervene in the forex market. If the Bank of Japan or the Ministry of Finance sells forex to guide the appreciation of the yen, it could lead to a return of risk-averse and arbitrage funds to traditional markets, thereby exerting short-term pressure on cryptocurrencies like Bitcoin. This creates uncertainty around the logic of “whether Bitcoin benefits from the depreciation of the yen.”

From the fundamental perspective, the Bank of Japan's interest rate hike has failed to boost the yen mainly because the policy has been fully priced in by the market. Prior to the rate hike, the overnight index swap had almost completely priced in this outcome, triggering the typical “buy the rumor, sell the news” trading behavior. In addition, the significant interest rate differential between Japan and the United States still exists, and Japan's real interest rate remains in a clearly negative range, continuously stimulating arbitrage trading that finances in yen and allocates high-yield assets.

Overall, the Bank of Japan's interest rate hike has not reversed the trend of yen depreciation, but rather exacerbated market fluctuations. Against this backdrop, Bitcoin's price movements remain highly dependent on macro policies and expectations of exchange rate interventions. For investors concerned about topics such as “the impact of the Bank of Japan's interest rate hike,” “yen depreciation and Bitcoin prices,” and “the impact of macro factors on the crypto market,” it is crucial to be vigilant about the uncertain risks brought by policy changes in the short term.