The Bank of Japan might really take action this time.

According to insider sources, if there are no major shocks this month, they’re very likely to raise interest rates—reaching the highest level since 1995. What does the market think? Swap trading data shows traders are pricing in a 90% probability.

Why do they dare to make a move? The key is that U.S. tariffs have largely settled, Japanese corporate profits are still holding up, and the central bank believes the economy can withstand it. Of course, they’re hedging their bets, saying they’ll hike and watch the reaction, and where they ultimately stop will depend on further observation—the current estimate for the neutral rate is floating somewhere between 1% and 2.5%.

But what does this have to do with crypto? A lot.

Here’s the old playbook: yen carry trade. Simply put, for years Japan’s interest rates have been abnormally low, so investors could borrow large amounts of yen at almost zero cost, exchange it for USD or other currencies, and then pour it into the stock market, bond market, or directly into high-risk assets like Bitcoin. This maneuver is essentially chasing high returns with “cheap money.”

Now, with the Bank of Japan raising rates, the rules of the game change. The cost of borrowing goes up, so what will those arbitrage funds do? Either they’ll pull out and convert back to yen to repay debt, or they’ll exit from high-risk assets to cut losses. The crypto market is already volatile, and when this kind of capital pulls out, the chain reaction can be fast and fierce.

So don’t underestimate this move by the Bank of Japan. It doesn’t just affect the yen exchange rate—it could also trigger significant turbulence across global risk assets, especially cryptocurrencies.