Will the Japanese yen Arbitrage Close Position wave hit Bitcoin again as the Central Bank of Japan is expected to raise interest rates next week with a probability of 99%?

The Bank of Japan will hold a policy meeting on January 23rd to 24th. The market expects a 99% chance of a rate hike next week. Marcin Kazmierczak, the COO of RedStone Oracles, warned that a rate hike by the Bank of Japan could trigger a wave of arbitrage close positions in the Japanese yen, dampening the optimistic sentiment of Trump's trade and potentially leading to a repeat of the big drop in August last year. According to Bloomberg, within a few days, forward market traders have almost confirmed that the Bank of Japan will raise interest rates next week. Overnight index futures on Friday showed a 99% chance of a rate hike at the Bank of Japan's policy meeting on January 23rd to 24th, a sharp rise from 71% on Wednesday. Bank of Japan Governor Haruhiko Kuroda said on Wednesday that the decision on whether to raise interest rates will be made at the next meeting, expressing stronger confidence in wage growth. This statement has increased market expectations of a rate hike and pushed the yen higher on the day. With reports that Bank of Japan officials believe there is a high possibility of a rate hike next week, unless there are major unexpected events after Trump's inauguration, expectations for a rate hike will further heat up. Japanese government bond yields have risen across the board, with the 2-year yield, which is more sensitive to monetary policy expectations, reaching its highest level since 2008 on Wednesday. The yen/USD exchange rate, which has been hovering around 158, rose 0.1% to 154.98 on Friday, reaching its strongest level since December last year, and is now at 155.54. Market participants expect the Bank of Japan to raise interest rates next week. Yukio Ishizuki, Senior Forex Strategist at Daiwa Securities in Tokyo, said that it is almost certain that the Bank of Japan will raise interest rates next week. He does not believe that there will be significant fluctuations in the market due to Trump's inauguration speech. Finance Minister Taro Aso said on Friday that he expects the Bank of Japan to implement an appropriate monetary policy to achieve price stability. He added that the details of the policy should be decided by the Bank of Japan, and in terms of interest rate views, interest rates change in response to wage and price increases, which is the natural law of the economy and optimizes resource allocation. Among the economists surveyed by Bloomberg, nearly 3/4 predict a rate hike next week, reflecting a sharp rise in rate hike expectations in the market after Kuroda's remarks. The implied volatility of the USD/JPY 1-week option covering the Bank of Japan's decision day has also risen to a one-month high. It is worth noting that the market's concern about the potential risks of yen arbitrage trading is increasing. If the Bank of Japan raises interest rates again, it may trigger a yen arbitrage close position wave similar to August 5 last year, which caused a global stock market and cryptocurrency market crash. Marcin Kazmierczak, the COO of RedStone Oracles, analyzed that if the Bank of Japan raises interest rates, it may strengthen the yen and force risk asset positions to be closed quickly, causing a chain reaction in the global market and potentially repeating the big drop in August last year. However, he emphasized that although the yen arbitrage close position wave may dampen the optimistic sentiment of Trump's trade, the impact may be gradual rather than immediate. The key is to observe how the central bank decision-makers balance domestic inflation targets and global market stability. In addition, the market has enough time to digest this news, and it is still difficult to judge how the market will behave.