BOJ’s potential QE shift could ignite a major rally in crypto and risk assets
Japan’s bond crisis has fueled Bitcoin’s appeal as a safe haven amid financial instability
Global markets are closely watching the Bank of Japan (BOJ)’s upcoming monetary policy meeting, which is set to take place on 16–17 June.
In fact, speculation is growing that the central bank may shift towards a more accommodative position, potentially reintroducing quantitative easing (QE) measures.
Arthur Hayes on Japan’s current economic condition
Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom, believes that a shift in Japan’s monetary policy could significantly help Bitcoin [BTC] and other cryptocurrencies.
Hayes said,
“If the BOJ delays QT, and restarts selected QE at its June meeting risk assets are going to fly.”
For context, Japan’s latest economic data painted a mixed picture for policymakers ahead of the BOJ’s June meeting.
In May, the country’s wholesale inflation slowed notably, with the Corporate Goods Price Index (CGPI) rising by 3.2% year-over-year – Its weakest pace since September.
This deceleration, driven by declining import costs for raw materials, may reduce the urgency for the BOJ to raise interest rates.
However, rising prices in categories like food and beverages suggested that companies are still passing on higher input costs to consumers. This, despite uncertain global conditions and subdued domestic demand.
Challenges ahead
Such an economic backdrop adds complexity to the central bank’s decision on whether to maintain or pivot its current monetary stance.
Remarking on this, Masato Koike, Senior Economist at the Sompo Institute Plus, noted,
“As wholesale inflation slows, consumer prices will also come under downward pressure with a lag.”
He added,
“The BOJ may have lost the opportunity to raise interest rates because inflation will have slowed significantly by the time the fog hanging over Japan’s tariff talks (with the U.S.) clears.”
Additionally, Japan’s deepening bond market crisis is casting a shadow over its broader financial stability, with yields on long-term government bonds hitting record highs and liquidity concerns reminiscent of the 2008 meltdown.
How will Bitcoin act as a saviour?
Despite these challenges though, the country’s crypto sector has continued to expand, with 32 registered crypto exchanges as of late April.
This contrast is a sign of shifting investor sentiment, as more market participants view Bitcoin as a potential hedge against the traditional financial system’s vulnerabilities.
Hence, with the yen carry trade weakening and economic uncertainties mounting, digital assets like BTC are increasingly emerging as safe-haven alternatives in Japan’s evolving financial landscape.
This, because a falling yen often means economic instability or loose monetary policy in Japan, prompting investors to seek safer or higher-yield alternatives.
In this environment, Bitcoin could gain appeal as a hedge against currency devaluation and financial uncertainty.
Altogether, a weakening yen could act as a bullish catalyst for Bitcoin in both local and global contexts.
Next: Has Ethereum’s bullish breakout hit a roadblock at the supply zone?
