HashKey Group chief analyst Jeffrey Ding argues that the global market is approaching a structural break as the Bank of Japan raises rates and the Federal Reserve cuts them, narrowing the U.S.-Japan rate gap and eroding the foundation of the yen carry trade. In his view, a decades-long model built on borrowing cheap yen to buy higher-yielding dollar assets is now under pressure from three directions at once: Japan’s exit from negative rates, shrinking yield differentials, and a weaker one-way case for yen depreciation. The article centers on the Federal Reserve’s Foreign and International Monetary Authorities repo facility, or FIMA, which allows foreign central banks to pledge U.S. Treasuries and obtain dollars without selling bonds into the open market. Ding says that mechanism could help Japan support the yen while avoiding a disorderly Treasury sell-off, but it comes with a cost: newly created dollars would flow back into the global financial system, adding liquidity. HashKey’s conclusion is that if FIMA becomes the preferred path, Bitcoin and gold could be among the main beneficiaries of the next phase, while U.S. technology stocks, Treasuries and other risk assets may still face deleveraging pressure as carry positions unwind.

The Bank of Japan could raise interest rates as early as its Sept. 17-18 policy meeting, and policymakers are also weighing a quicker tightening path after that, according to a Reuters report citing three people familiar with internal discussions at the BOJ. Markets have already priced the odds of a September move at nearly 80%, putting the next meeting at the center of attention. The report says the BOJ is under its strongest pressure to keep lifting rates since ending its ultra-loose policy framework in 2024. Since that shift, its pace has been roughly two rate hikes a year. In June, the central bank lifted rates to 1%, the highest level in 31 years. Reuters said some analysts believe a September move could also leave room for another hike in December, which would bring the yearly total to three and strengthen expectations for one increase per quarter. The backdrop includes a weak yen, elevated wholesale inflation, inflation expectations near or above 2% among households, companies and economists, and imported price pressure tied to Middle East conflict and strong global AI demand. BOJ Governor Kazuo Ueda said after the July meeting that the bank could move faster if financial conditions are judged too loose, while the meeting summary showed some members pushing for a quicker pace to avoid falling behind the curve.

Japanese Prime Minister Takaichi has expressed support for the Bank of Japan's near-term rate increase, with the next move likely in September or October. According to ChainCatcher, the BOJ is worried that a weak yen is pushing up prices, and the government and central bank are now moving closer on the need to tighten. The prime minister's office said specific monetary policy steps should be decided by the BOJ, but the two sides should cooperate closely to "stably" achieve the 2% inflation target.

The Japanese yen moved back toward the 159 level on Aug. 12, a sign that the impact of the latest U.S.-Japan intervention is fading. The currency briefly fell 0.1% to 159.39 before closing little changed, while its recent weakness has already erased roughly half of the gains triggered by the joint action. According to the source cited in the original report, the U.S. Treasury on July 31 used the New York Fed to instruct Goldman Sachs and Morgan Stanley to sell euros and buy yen, marking the first direct U.S. participation in yen intervention in nearly 30 years. That move helped lift the yen from around 163 to 155. The report says the rebound did not hold because elevated U.S. Treasury yields and rising international oil prices restored support for the dollar and added pressure on Japan, which relies on imported energy. Market attention is now shifting to the Bank of Japan’s next policy meeting in September. Several strategists cited in the report argue that unless the BOJ moves more decisively toward policy normalization, intervention alone will have limited effect. With 160 now seen as a political red line, traders are watching for the possibility of another round of official action if the yen weakens quickly again.

Japan and the United States have shown rare coordination in pushing the yen stronger, but a fundamental rift between U.S. Treasury Secretary Bessent and Japanese Prime Minister Takaichi Sanae over the Bank of Japan could weaken that joint effort, according to ChainCatcher. Bessent views tighter monetary policy as vital to addressing the yen's weakness, while Takaichi is cautious about raising interest rates and concerned about the impact on Japan's economic recovery. The BOJ's benchmark rate still stands at 1%. The two officials' differences on how the central bank should act stand out even as their governments align on the goal of a stronger yen, and those differences could undercut what the two sides are trying to achieve together.

Japanese government bond yields extended their climb, with the 5-year yield setting an all-time high and the 2-year yield reaching its strongest level since 1995, according to ChainCatcher. Rising crude oil prices have stoked inflation concerns, prompting markets to price in roughly a two-thirds probability of a Bank of Japan rate hike in September. Even so, the higher yields have yet to provide clear support for the yen, as external factors — including elevated U.S. long-term Treasury yields and a firm dollar-yen exchange rate — continue to weigh on the currency.

BitMEX co-founder Arthur Hayes argues that U.S. and Japanese officials may favor a little-used route to support the yen without directly dumping U.S. Treasuries: Japan’s Ministry of Finance could repo its Treasury holdings through the Federal Reserve’s FIMA facility, obtain dollars, then sell those dollars to buy yen in the foreign-exchange market. In Hayes’ framework, that would amount to a balance-sheet expansion at the Fed because outstanding FIMA lending would rise alongside the collateral posted. He says the mechanism would strengthen the yen while injecting fresh dollar liquidity into the global system. Hayes lays out three possible ways to drive yen appreciation: aggressive rate hikes by the Bank of Japan, forced repatriation by Japanese institutions such as GPIF, or FIMA-backed Treasury financing. He dismisses the first two as politically and financially difficult, and says the third path is the one officials are most likely to choose. He estimates that the Japanese government and GPIF together hold about $1.373 trillion in U.S. Treasuries, a pool large enough, in his view, to matter if FIMA limits are loosened. Based on that thesis, Hayes says he is already heavily positioned in Bitcoin, physical gold and gold miners. He also names Ether and Ethena’s ENA token as crypto assets he sees as offering more upside if dollar liquidity expands and Bitcoin’s basis trade improves.

The Bank of Japan may consider another rate hike at its Sept. 17-18 monetary policy meeting after raising rates in June, according to Jiji Press, which cited people familiar with the matter. The report said inflation risks in Japan are rising, with prices facing pressure from three factors: growing AI-related demand, a sharp decline in the yen, and higher crude oil prices. The outlook for policy timing is also shifting. While many market participants had expected the BOJ to move roughly once every six months, a summary of opinions from the bank’s July 30-31 policy meeting, released on Monday, showed that some board members favor a faster pace. One member said policy rate increases could come faster than markets expect, while another argued that the BOJ needs to accelerate the adjustment of monetary easing. The report also pointed to potential spillover into crypto markets. Japan has long been a major source of yen carry trades, with low borrowing costs helping channel money into higher-yielding assets including U.S. stocks and cryptocurrencies. If the BOJ tightens more quickly, carry trade costs could rise and some capital could return to Japan, with the effect on crypto depending on both the scale and pace of any increase.