According to Woofun AI, Japan's core inflation rate for September breached the 2% target threshold, directly triggering market concerns about two consecutive rate hikes by major global central banks in December, with the already weakened BTC price facing renewed downward pressure. This deterioration in macroeconomic fundamentals has made liquidity expectations for the cryptocurrency market extremely fragile ahead of year-end.
Looking at the specific structure of the inflation data, the core CPI excluding fresh food climbed from 1.7% in August to 2.1%, marking the first time in nine months that this indicator has exceeded the 2% target set by the Bank of Japan (BOJ); meanwhile, the measure excluding fuel prices also rose from 1.9% to 2.4%. The goods sector showed divergence, with overall commodity prices rising 2.8%, up from 2.6% in August, yet rice prices plunged 20.6%; services inflation rose from 1.2% to 1.5%. These granular data points will be factored into the BOJ's considerations at its two-day policy meeting concluding on October 30, and will be used to adjust forecast figures.
Reviewing the recent policy path, the BOJ raised its policy rate to 1.25% in September, the highest level in 31 years. Multiple media surveys show that analysts widely expect the rate to rise further to 1.50% in December, with a potential terminal peak of 1.75% or 2%. Marcel Thieliant, head of Asia-Pacific at Capital Economics, noted that there is currently little evidence that tightening policy has effectively slowed economic growth, so the terminal peak policy rate is likely higher than the expected 2%. Although the BOJ will most likely keep rates unchanged at next week's meeting, its forward guidance on the future rate hike path will become a key variable affecting market sentiment.
Data compiled by Woofun AI shows that rate hike expectations for the Federal Reserve (Fed) are similarly strong. According to CME's FedWatch data, the probability of the Fed raising its rate target by December 9 is as high as 80.5%; while the probability of action on October 28 is 7.2%, a significant decline from 55.4% last month. The BOJ is scheduled to hold meetings on December 17 and 18 to make its decision. The policy moves of these two central banks will profoundly influence BTC prices through the yen carry trade mechanism. Investors who borrow yen for high-risk investments tend to sell positions when Japanese rates rise, thereby bringing selling pressure to the cryptocurrency market; while a Fed rate hike could partially offset this pressure by supporting the dollar. If both central banks raise rates by similar magnitudes, the US-Japan interest rate differential would remain largely unchanged, reducing investors' incentive to unwind carry trade positions.
Historical data shows that after the BOJ raised rates to 0.25% in July 2024, BTC prices fell from approximately $70,000 to $49,000; however, before rates rose again in September, BTC prices remained stable while Japanese assets declined instead. Currently, BTC is in a weaker position, trading at $81,293 as of press time, down 3.16% within 24 hours and down 5.6% over the past month. It briefly touched a peak above $86,000 in early October, but its rebound since October 9 has consistently failed to break through the $84,000 mark. If the BOJ's forward guidance released on October 30 takes a hawkish stance, BTC will face even less buffer room.
As the December dual central bank rate hike window approaches, the logic of tightening macro liquidity will shift from expectation to reality, and the market needs to be alert to chain reactions triggered by the unwinding of yen carry trades. This marks the second time since the July 2024 rate hike shock that BTC faces a systemic risk test brought about by a shift in Japanese monetary policy.
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