Most investors have their eyes on President Trump’s inauguration on January 20, which has the potential to be a key catalyst for bitcoin (BTC) and cryptocurrency prices.

A few days later, however, a potential rate hike from the Bank of Japan (BoJ) is on the cards. According to a Bloomberg chart shared by analyst Michael Kramer on X, the market is currently counting on a 90% chance of a rate hike on January 24th.

Earlier, the BoJ rate hike caused chaos in both the traditional and digital asset markets. This was a key catalyst for the unwinding of the Yen trade in early August, which sent bitcoin down to $49,000. Traders are likely preparing for another selloff this time.

Since 2016, the BoJ has maintained negative interest rates; but in 2024 they raised the rate twice, from -0.1% to 0.25%. The implied rate going into the meeting is 0.45%; however, this could change drastically as Japan has an inflation report just the day before, on January 23rd.

Year-on-year headline inflation is 2.9%, the highest since August. Warmer-than-expected inflationary pressures could create fear in the market, and another iteration of the yen carry trade could be on the way.

Even with the remarkable strength of the DXY index, which is currently above 109, the highest level since November 2022, it has bounced from 100 from the September low.

The DXY index follows a similar trajectory to Donald Trump’s first term in office, with a rally in the DXY leading up to his inauguration and then a significant decline, giving risk assets a much-needed boost. The DXY index measures the value of the US dollar against a basket of major foreign currencies.

The Japanese yen is at its strongest level against the dollar since December 16 at 156.

Read more: Bank of Japan governor hints at more rate hikes; BTC down 0.4%