The Bank of Japan (BoJ) is expected to influence global risk assets, including stocks and cryptocurrencies, at its upcoming monetary policy meeting on June 16-17.
Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, indicated that a possible shift back to quantitative easing (QE) by the BoJ could trigger a surge in Bitcoin and other risk assets. Hayes noted on June 10 that if the BoJ delays quantitative tightening (QT) and resumes selective QE, risk markets could see significant gains.
Quantitative easing involves central banks purchasing bonds to inject liquidity, lower interest rates, and stimulate economic activity during financial challenges.
In late July 2024, the BoJ announced plans to reduce government bond purchases by 400 billion yen quarterly starting August 2024. The upcoming June meeting will feature an interim review of this QT strategy, opening the possibility for a policy pivot.
Sources cited by Bloomberg revealed BoJ officials are considering smaller bond purchase cuts—from 400 billion to 200 billion yen per quarter—from April 2027 onward.
Bitcoin’s surge to an all-time high of $112,000 on May 22 followed a historic peak in Japan’s 30-year bond yield on May 20, underscoring investor anxiety about Japan’s sovereign debt market. André Dragosch, Bitwise’s head of European research, linked these bond market concerns to growing institutional interest in Bitcoin as a hedge against sovereign default risk.
Dragosch explained that rising bond yields and perceived default risks enhance Bitcoin’s appeal as a counterparty risk-free asset, supporting speculation that Bitcoin could approach $200,000.
Typically seen as safe havens, government bonds with sharply rising yields often indicate increased worries about fiscal stability and repayment capability.