Bitcoin traders eye BOJ rate decision as yen short positions hit nine-year high
By
Omkar Godbole
5h ago· 3 min readenNews
75/100
Toasty
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Lightly browned and well buttered. A solid pick from the rack.
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Summary
Bitcoin traders are closely watching the Bank of Japan's expected interest rate hike to 1% on Tuesday, as leveraged funds have built up the largest speculative short positions in the yen since November 2017 (over 115,000 contracts). This creates risk of a sharp short squeeze if the BOJ signals more aggressive tightening, which could unwind yen-funded carry trades that currently support risk assets like Bitcoin and cryptocurrencies.
Key quotes
· 3 pulledBitcoin traders typically obsess over Fed meetings. This week, the one that matters might be in Tokyo.
The Bank of Japan is widely expected to raise its benchmark interest rate to 1% from 0.75% on Tuesday, bringing it to its highest level since 1995.
Leveraged funds increased their speculative short positioning in yen to over 115,000 contracts in the week ended June 9, the highest since November 2017.
A large build-up of speculative short positions in the yen raises the risk of a sharp short squeeze if the BOJ signals more aggressive tightening, potentially unwinding yen-funded carry trades that support risk assets.
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