BOJ’s $534B ETF Unwind Looms as Rate Hike Speculation Mounts
The Bank of Japan prepares to offload its ¥80 trillion ($534B) ETF portfolio starting January, marking a historic shift from decades of unprecedented monetary easing. Officials aim for a glacially paced exit—potentially spanning years—to avoid destabilizing markets, mirroring Japan's gradual bank stock divestment in the 2000s.
Timing coincides with mounting expectations for a December rate hike, which Polymarket odds currently peg at 68%. A move to 0.1% would end the world's last negative rate regime, potentially triggering Ripple effects across carry trades and crypto markets that benefited from yen-funded leverage.
Market observers note the BOJ's ETF holdings ballooned alongside Japan's stock rally, creating significant unrealized gains. The unwind threatens to tighten global liquidity further as the Fed and ECB maintain restrictive policies—a headwind for risk assets already pressured by Bitcoin's recent volatility.
