The Bank of Japan may raise interest rates to 0.75%, increasing the risk of unwinding yen carry trades.

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According to Odaily Odaily, the Bank of Japan may raise interest rates by 25 basis points to 0.75% at its meeting on December 19, the highest level since 1995. Following the news, the yen rose from around 155 to approximately 154.56. A stronger yen is typically accompanied by macroeconomic deleveraging, potentially triggering the unwinding of carry trades involving yen-funded assets, tightening the liquidity that previously supported Bitcoin's rebound from its November lows. If funding costs continue to rise, leveraged funds may reduce their exposure to highly volatile assets such as BTC. (CoinDesk)

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