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Crypto Trader Reveals How Japan Influences the Crypto Market

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By Jaden Francis - - 5 Mins Read


Japan flag, bitcoin, and the US dollar
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It is predicted that Japan's impact on the worldwide cryptocurrency market will become more significant, possibly even surpassing that of the U.S. Federal Reserve.

Griffin Ardern, a volatility trader at Blofin, a crypto asset management company, thinks that the Bank of Japan (BOJ) is becoming a key player in shaping market trends. Unlike the Federal Reserve and the European Central Bank (ECB), the BOJ's intentions are unclear, making it a possible source of unexpected developments.


For some time, the BOJ has been using policies like guiding short-term interest rates to minus 0.1% and keeping the 10-year government bond yield around 0% using a strategy called yield curve control (YCC). They've also maintained a range of 0.5% above and below the 10-year yield target. In July, the BOJ signaled that it might allow the yield to exceed 1.0%.


These measures have pushed global bond yields down and pumped trillions of dollars into the worldwide financial system. It has made carry trades more popular, where investors borrow yen and invest in higher-yielding, riskier assets.

Possible Impact on Crypto from BOJ's Policy Reversal

If the BOJ reverses these policies, like ending negative interest rates and yield curve control, it could lead to a stronger Japanese yen (JPY). This, in turn, could affect risk assets, including cryptocurrencies. While other central banks like the Federal Reserve and ECB are tightening their policies, the BOJ has yet to follow suit.


Griffin Ardern warns that as the BOJ starts, Japan's influence on the global crypto market is poised to take center stage, potentially overshadowing even the U.S. Federal Reserve. Griffin Ardern, a volatility trader at the crypto asset management firm Blofin, believes that the Bank of Japan (BOJ) is becoming a major factor in shaping market dynamics. Unlike the clear policy paths of the Federal Reserve and the European Central Bank (ECB), the BOJ's intentions remain uncertain, making it a source of potential surprises.


"Once the BOJ begins unwinding the ultra-easy policy, many assets previously obtained through the JPY-USD arbitrage channel [carry trade] may be sold off to repay debt denominated in JPY. That, in turn, may have an unexpected impact on the crypto market," Ardern said.


It's an easy policy: assets obtained through the JPY-USD arbitrage channel (carry trade) may be sold to repay debts in JPY. This development could introduce unexpected volatility into the crypto market. Charles Schwab also expressed a similar view, suggesting that unwinding carry trades could result in significant cross-market volatility.

Anticipated BOJ Policy Changes

Many economists surveyed between September 8 and 19 expect the BOJ to end its hostile interest rate policy and abandon the curve control program in the coming year. ING, a financial institution, speculates that the central bank might signal a more hawkish stance on Friday. 


As the BOJ's actions continue to unfold, its influence on global markets, including the crypto market, remains a topic of great interest and speculation. Japan's central bank could play a pivotal role in shaping the future of financial markets worldwide. It is important to keep an eye on developments in Japan's crypto regulation and crypto in Japan as they could have a broader impact on the global financial landscape.