Bitcoin Faces Uncertainty Ahead of Trump Inauguration and BoJ Rate Decision

Investors are closely watching two major events in January that could significantly impact Bitcoin (BTC) and cryptocurrency prices: President Trump's upcoming inauguration on January 20 and a potential rate hike by the Bank of Japan (BoJ) on January 24.

According to market data shared by analyst Michael Kramer, there is a 90% likelihood of the BoJ raising interest rates. Historically, such moves have had ripple effects across traditional and digital asset markets. The last rate hike triggered turmoil in August, causing the Yen carry trade to unwind and sending Bitcoin plunging to $49,000. Traders are now preparing for a possible repeat scenario.

Since 2016, the BoJ had maintained negative interest rates, but 2024 marked a shift with two rate increases, bringing rates from -0.1% to 0.25%. Current market predictions place the implied rate at 0.45%, though this could change depending on Japan’s inflation report due on January 23.

Inflation has hit 2.9% year-over-year, the highest since August, and a higher-than-expected figure could spark fears of another market disruption.

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Meanwhile, the U.S. Dollar Index (DXY) has surged to 109, its highest level since November 2022, after climbing steadily from a September low of 100. The DXY’s trajectory mirrors its movement during Trump’s first term, where a strong rally before his inauguration was followed by a sharp decline, providing relief to risk assets.

The Japanese Yen has also strengthened, reaching its highest level against the dollar since mid-December, trading at 156. With these developments, market participants are bracing for volatility as both the BoJ’s decision and Trump’s policies could reshape financial dynamics in the coming weeks.

Alexander Zdravkov