**Opportunities and Challenges of Japan**

Japan's economy is preparing for an important decision on interest rates this week.

According to Polymarket, the likelihood of a 0.25% rate hike is very high with a probability of 98%. If this occurs, the interest rate of the Bank of Japan will reach 0.75%, the highest level since 1995.

**Why Is the Market Afraid?**

Several reasons make the market anxious about the interest rate hike in Japan:

• Higher interest rates will strengthen the Japanese currency

• Carry trade transactions will be unwound

• Demand for dollars will shrink

• Risks to risk assets

**Bitcoin History Since the Bank of Japan Implemented Easing Policy**

The bitcoin market has not fared well when interest rates in Japan rise:

• March 2024: down 23%

• July 2024: down 26%

• January 2025: down 31%

**What Is the Market Story?**

It's not just the interest rates rising, but the guidance policy of the Bank of Japan and the pace of increases in the future will affect the market.

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