A blockchain-based version of the Japanese yen is set to launch, coinciding with expectations of a Bank of Japan (BOJ) interest rate hike. Japan’s Financial Services Agency is likely to approve the country’s first yen-denominated stablecoin this fall. Tokyo-based fintech firm JPYC plans to spearhead this initiative.

Stablecoins pegged to external references like the yen facilitate capital transfers with less volatility than other cryptocurrencies. Monex Group, another Tokyo-based company, is considering launching a JPY stablecoin for international remittances and settlements. This move is seen as essential to avoid falling behind in the stablecoin market.

The BOJ is expected to raise interest rates, with Hokuhoku Financial Group predicting a hike in either October or December. This aligns with market consensus, supported by Bloomberg Economics forecasting a 25 basis point rate hike at the BOJ’s October meeting. The Tokyo inflation report indicates consumer price momentum is on track to reach the 2% target.

Yields on long-duration Japanese government bonds have surged to multi-decade highs as the BOJ prepares for a rate hike. The yen’s appeal is increasing due to a narrowing gap between U.S. and Japanese 10-year yields. This could lead to appreciation in the yen, impacting the BTC/JPY pair, which has already seen an 8% drop this month.

Technical analysis suggests a double top bearish reversal pattern for BTC/JPY, indicating potential downside risk. The measured move method forecasts a target of about 14,922,907 JPY, reflecting the impact of the strengthening yen and expected rate hikes. This analysis highlights the potential challenges for bitcoin priced in yen.

Read more at Yahoo Finance: Yen-Backed Stablecoin Can’t Come at a Better Time as BOJ Seen Raising Rates