XRP Price Risks Crashing as Japanese Yen Carry Trade Unwind Gains Momentum

How the $XRP price will possibly react has come into focus as rumors of a major decision by the Bank of Japan gain momentum.

History shows that the last Japanese yen carry trade unwinding did not pan out well for $XRP, as the asset lost more than a third of its value in days. Unconfirmed speculation of a similar unwinding is growing, and concerns of its implications for $XRP have resurfaced.

Bank of Japan Planning Drastic Policy Measures?

Yuto, an account claiming ties with the Bank of Japan (BOJ), has raised eyebrows with a recent cryptic message. In a tweet, the account suggested that the BOJ is preparing a measure that will “affect the lives of billions of people.”

Its mention of the Western countries further adds context. The tweet expressed its deepest apologies to them, suggesting the policy would majorly affect them.

Notably, this raises concern because Yuto reportedly has a track record of foreshadowing the Bank of Japan’s policy decisions before official announcements. While the post did not state specifically what the coming measure will be, many have linked it to the yen carry trade unwinding.

BOJ Interest Rate Hikes and Why July 30 Is in Focus

Since Prime Minister Sanae Takaichi entered office in October 2025, Japan has increased the interest rate twice. In June, the BOJ raised the rate by 25 basis points to a 31-year high of 1%, while declaring its readiness to further increase it to curb inflation.

With the rising cost of imports and the yen’s consistent price weakness, analysts are speculating that the BOJ could further increase borrowing costs. This brings July 30 into focus, which aligns with the next rate decision day for Japan’s central bank.

If what Yuto mentioned is anything to go by, the BOJ could be planning a jumbo interest rate hike similar to what it did in 2024. For context, the BOJ made a historical decision to raise the cost of borrowing from around 0%-0.1% to 0.25% in July 2024, sending the global market into a frenzy.

Such a decision would spark a yen carry trade unwinding and bring renewed volatility to the global market, including cryptocurrencies. Notably, the size of the yen carry trade is in hundreds of billions of dollars. When rates become too high, the trade becomes unprofitable, pushing investors to sell off assets overseas to cover loans in yen.

$XRP Fell 35% the Last Time

Like most cryptocurrencies, $XRP suffered from the adverse market conditions of the yen carry trade unwinding in 2024. As investors sold, liquidity left the digital asset sector, dragging the asset lower.

On July 31, 2024, $XRP reached a high of $0.659. Following the rate hike and the unwinding that followed it over the course of the next few days, the coin dropped drastically. It declined by 34% to a low of $0.432 on August 5.

The concern is that if the unwinding reaches levels similar to 2024, it could have the same effect on the price of $XRP. A 34% drop from the current market price of $1.09 would take $XRP to a low of $0.72.

Notably, this remains highly speculative and lacks certainty. However, as rumors continue to grow, how $XRP will react to a yen carry trade unwinding continues to draw attention, particularly in the current weak market conditions.