The hanging man candlestick is a single-bar pattern that forms after an uptrend. It consists of a small body near the top and a long lower shadow. It points to a possible bearish reversal. Most traders wait for a confirmation candle before acting.

In the world of technical analysis, candlestick patterns are commonly used to decipher market trends and potential reversals. Among the many setups, the hanging man holds particular significance. This distinctive formation captures traders’ attention as it often serves as a warning sign of a possible trend reversal. This article will go through the technical analysis of the hanging man formation and explain how traders can trade with it.

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What Is a Hanging Man Candlestick Pattern?

A hanging man candle is a single-bar pattern that forms after an uptrend and warns of a possible bearish reversal. It has a small real body near the top, a long lower shadow, and little or no upper shadow. The colour of the body is secondary, though a bearish close adds weight.

Psychology Behind the Hanging Man Pattern

The psychology behind the hanging man candlestick pattern reflects a shift in market sentiment. Buyer exhaustion sits at the core of the hanging man pattern. After a long advance, demand thins and fewer buyers step in at higher prices. Sellers then emerge and drive the long lower shadow, signalling a possible uptrend reversal.

The long lower shadow shows that sellers were able to push prices down significantly during the trading session. Although buyers managed to drive prices back up, the close near the open price suggests weakening bullish sentiment. This pattern signals that seller pressure is increasing, potentially leading to a bearish reversal as confidence among buyers diminishes.

The hanging man is a versatile formation that can be applied across a wide range of financial instruments, including stocks, indices, commodities, and forex, on different timeframes.

Characteristics of a Hanging Man Candle

A hanging man candle has a clear shape that sets it apart on a chart. Five features define it. Each one matters, and the pattern carries more weight when all five line up after a strong uptrend.

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• Small real body: the open and close price sit close together, near the top of the range.
• Long lower shadow: the shadow runs at least twice the length of the body.
• Little or no upper shadow: price closes near the session high.
• Prior uptrend: the candle forms after a sustained move higher.
• Confirmation: a bearish follow-through candle is needed before the signal holds.

Without a prior uptrend, the same shape is read as a hammer rather than a hanging man candlestick. Context, not colour, gives the candle its meaning.

How Traders Identify a Hanging Man Candlestick

To spot a hanging man pattern in stocks and other financial instruments, you may follow these steps:

1. Look for an existing uptrend: Start by identifying a prevailing upward price movement on the chart.
2. Find a small real body near the top of the range: It should have a long lower shadow and little to no upper shadow. This formation resembles a figure hanging from its head.
3. Check the lower shadow runs at least twice the length of the real body: A short shadow weakens the signal.
4. Treat colour as secondary: The colour of the candle doesn’t matter, but if it’s bearish, the signal is stronger.
5. Consider supporting indicators: Utilise other technical indicators or oscillators to further validate the potential reversal. These can include trendlines, moving averages, or momentum indicators that align with the bearish interpretation.

Even with all five checks met, the hanging man candlestick still needs a confirmation candle before it carries weight. The pattern is a warning, not a trigger.

What Is the Confirmation Candle for a Hanging Man?

A hanging man confirmation candle is the bearish bar that follows the pattern and provides the candlestick confirmation that validates the reversal. Without it, the hanging man is only a warning. Traders typically watch for one of three signals in their candlestick chart analysis.

The first is a bearish engulfing candle that fully covers the prior body. The second is a strong bearish close well below the hanging man’s real body. The third is a clean break below the hanging man’s low. Each shows that sellers have taken control after the initial warning. The stronger the confirmation, the more weight the signal tends to carry.

Trading the Hanging Man Pattern

Those trading the hanging man reversal pattern apply a systematic approach. Here are a few steps traders usually follow to trade this pattern:

• Spot the pattern: Identify the setup by using the steps mentioned above.
• Look for confirmation signals: The setup alone is not sufficient for making trading decisions. Seek additional confirmation through subsequent candlestick patterns or technical indicators. This can include bearish candlestick patterns (e.g. bearish engulfing), a pullback from a resistance level, or the convergence of other indicators signalling a potential reversal.
• Define your entry point: Traders typically consider an entry point either when the next candlestick confirms the bearish sentiment or when the price breaches a significant level.
• Identify profit targets: The candlestick itself doesn’t provide specific targets. Traders could identify profit targets by looking at previous support levels, Fibonacci retracement levels, or other technical analysis tools like moving averages or pivot points.
• Consider risk management: Traders might set a stop-loss order above the hanging man pattern. Some traders assess the risk-reward ratio of the trade to ensure the trade aligns with their risk tolerance. Risk management tools like position sizing, setting stop-loss orders, and diversification may help traders calculate risks.
• Monitor the trade: Traders keep a close eye on their positions as they progress. They pay attention to any changes in market conditions or additional signals that may invalidate the trade.
• Learn from outcomes: Regardless of the outcome of the trade, traders analyse it afterwards to identify areas for improvement. They assess whether the setup provided accurate signals and identify any factors that may have affected the trade.

Live Market Example

Consider a hanging man that forms on the USD/JPY pair after a steady uptrend. The candle has a small body near the top and a long lower shadow. A bearish candle follows and closes lower, which validates the setup.

A common approach places the stop loss just above the high of the hanging man, since a move back above it would weaken the bearish case. The take profit order is at the next level of support. The gap between entry and that support sets the risk-reward ratio for the trade.

Traders can consider using the TickTrader platform to test the hanging man pattern rules.

Limitations of the Hanging Man Pattern

The hanging man candlestick pattern, while useful, has certain limitations that traders need to consider:

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• False Signals: The hanging man can produce false signals, especially in volatile markets where price movements are erratic. A candle that looks valid can still fail once the next bar prints.
• Market Context: The reliability of the pattern varies depending on the broader market context and prevailing trends. The same shape means little without a clear prior uptrend behind it.
• Timeframe Sensitivity: The pattern’s signals can vary across various timeframes; what works on a daily chart may not be a strong signal on an intraday chart.
• Not Standalone: It is used as part of a comprehensive trading strategy that includes other indicators and risk management tools.

Context does most of the work here. The pattern flags a possibility, not a certainty.

Hanging Man vs Similar Candlestick Patterns

Understanding how the hanging man pattern differs from similar candlestick patterns may help in accurate technical analysis.

Several single-candle formations look almost identical to it, which makes them easy to confuse. The difference comes down to three things: the trend the candle forms in, where the body and shadow sit, and the signal it gives. The three comparisons below break it down against the hammer, the pin bar, and the shooting star.

Hanging Man vs Hammer

Both candles share the same structure: a small body near the top and a long lower shadow. The hanging man vs hammer difference comes down to the trend each one forms in.

The hanging man candlestick forms in an uptrend and signals a potential bearish reversal, while the hammer appears in a downtrend, indicating a potential bullish reversal. Both candles require confirmation from subsequent price movements. They are typically analysed within the context of the overall market trend and other technical indicators.

Hanging Man vs Pin Bar

A pin bar and a hanging man are both single-candlestick patterns with small bodies and long shadows, but they serve different purposes in price action trading. The pin bar has a small body and a long tail, indicating a reversal, but it can appear in bullish and bearish markets. In a bullish trend, it’s called a shooting star, it has a long upper shadow and a small body, and signals a downward reversal. In a bearish trend, it’s called a hammer, it has a long lower shadow and a small body, and signals a bullish reversal. Its long tail shows a strong rejection of a certain price level, with the body pointing in the direction of the anticipated reversal.

The hanging man, however, specifically occurs after an uptrend and signals a potential bearish reversal, characterised by a small body at the top and a long lower shadow, indicating selling pressure.

Hanging Man vs Shooting Star

The shooting star and the hanging man are both bearish reversal patterns, but they differ in their appearance and context. A shooting star occurs after an uptrend and features a small body at the bottom with a long upper shadow. It indicates that the price was pushed up significantly but fell back down, showing strong selling pressure.

The hanging man also appears after an uptrend but has a small body at the top with a long lower shadow. It suggests that sellers dominated the session despite an initial push by buyers.

Both require confirmation from subsequent candlesticks to validate the reversal.

Is the Hanging Man Pattern Reliable?

On its own, the hanging man is a moderate signal. Its reliability depends on what surrounds it, not the candle alone. Four factors decide how much weight it carries.

Market context matters first. The pattern means little without a clear, sustained uptrend behind it. The same shape inside a choppy range carries almost no signal.

Trading confirmation comes next. A hanging man without a bearish follow-through candle is just a warning, and many resolve back into the uptrend. A confirmed signal is far more dependable than an unconfirmed one.

Timeframe shapes reliability too. A hanging man candle on a daily or weekly chart tends to hold more weight than one on a one-minute chart, where noise produces frequent false signals.

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Supporting tools round it out. Traders often pair the pattern with support and resistance, volume, or momentum readings as part of their hanging man technical analysis. Agreement across signals raises the odds the reversal holds.

The takeaway is simple. The hanging man pattern flags a possibility, not a certainty, and works as one input among several rather than a standalone trigger.

Final Thoughts

While the hanging man alone is insufficient for making trading decisions, it serves as a warning signal that buyers may be losing control and that selling pressure could increase. Traders seek additional confirmation through subsequent candlestick patterns, support and resistance levels, and other technical indicators to validate the potential reversal.

In short, identify the candle by its small body, long lower shadow, and prior uptrend, then wait for a bearish confirmation candle before the trend reversal signal carries weight. By understanding the implications of the setup within the broader market context and employing proper risk management strategies, traders can support their decision and identify different setups across the markets. Once comfortable with a strategy, traders may consider opening a forex trading account with FXOpen to apply it across more than 700 markets.

FAQ

What Does the Hanging Man Pattern Indicate?

The hanging man trading pattern in technical analysis typically indicates a potential bullish trend reversal. It suggests that the buyers, who have been driving the market higher, are losing control, and the selling pressure may increase. The hanging man is represented by a small body near the top of the candlestick, a long lower shadow, and little to no upper shadow.

Can a Hanging Man Candle Be Bullish?

No, there is no such thing as a bullish hanging man candlestick pattern. The bearish hanging man pattern indicates a potential trend reversal from an uptrend to a downtrend.

Is the Hanging Man Pattern Reliable?

The reliability of the hanging man pattern, like that of any candlestick formation, depends on the broader market context and supporting technical signals. Although it is widely recognised as a potential bearish reversal pattern, it isn’t used as the sole basis for trading decisions. Traders typically seek confirmation through subsequent bearish price action, such as a strong bearish candle following the pattern, as well as additional technical indicators that support the likelihood of a trend reversal.

What Is the Confirmation Candle for the Hanging Man?

A confirmation candle for the hanging man is a bearish candlestick that follows the pattern, confirming the reversal. This can include a bearish engulfing candle or a candlestick closing well below the hanging man’s body, indicating increased selling pressure.

Is the Hanging Man Pattern Bearish?

Yes, it is generally considered a bearish pattern that appears after a strong uptrend. It is formed when the price’s open or close is near or at its high and there is a significant decline during the trading session.

Does the Colour of a Hanging Man Candle Matter?

No, colour is secondary. A hanging man can close red or green, and both versions are valid. However, a bearish red close adds weight, since it shows sellers ended the session in control. The shape and the prior uptrend drive the hanging man candle meaning far more than the body colour.

Can a Hanging Man Appear in Forex Markets?

Yes. The hanging man appears across forex, stocks, indices, commodities, and other markets on any timeframe. In hanging man forex trading, it often forms on major pairs after a sustained uptrend. The signal reads the same way regardless of instrument, though confirmation and market context still decide its reliability.

What Timeframe Is Commonly Used for a Hanging Man Pattern?

Higher timeframes tend to be more reliable. A hanging man on a daily or weekly chart usually carries more weight than one on a one-minute chart. Lower timeframes produce more noise and more false signals. Many traders treat the hanging man trading pattern as stronger when it forms on longer timeframes near key levels.

What Indicators Are Often Used With a Hanging Man Candle?

Traders often pair the candle with momentum and trend tools. Common choices include the RSI, moving averages, volume, and resistance levels. These may help confirm whether the bearish reversal candlestick signal is likely to hold. No single indicator confirms the pattern alone, so agreement across several tools tends to raise the odds.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Bitcoin has retreated toward $65,000 ahead of the Federal Reserve’s policy decision as traders cut risk and reassess the outlook for interest rates under newly appointed Fed Chair Kevin Warsh.

According to data from crypto.news, Bitcoin (BTC) price fell from a June 16 high of near $67,200 to an intraday low around $65,236 on June 17 before stabilizing near $65,300 at press time. The pullback came as investors awaited the outcome of the Federal Reserve’s two-day policy meeting, with policymakers expected to keep rates unchanged at 3.50%–3.75% when the decision is released later today.

Attention has instead shifted to the Fed’s updated dot plot and Warsh’s first post-meeting press conference. Traders have increasingly focused on whether policymakers abandon any remaining easing bias and reinforce expectations that borrowing costs could remain elevated for longer amid inflation running above 4%.

Outside crypto, the cautious mood extended across several asset classes. Gold and silver both traded modestly lower during the session, while crude oil slid toward $75 per barrel for a fifth consecutive day as markets priced in the possibility of renewed Iranian oil exports under a proposed U.S.-Iran agreement.

At the same time, Asian technology shares continued attracting capital, with Japan’s Nikkei 225 reaching fresh record highs above 70,000 amid ongoing enthusiasm surrounding artificial intelligence investments.

Technical structure leaves Bitcoin trapped between $60K support and $68K resistance

Bitcoin’s recent rebound from below $60,000 has stalled near a major technical resistance zone.

On the daily chart, BTC has returned to a support-turned-resistance region between roughly $65,200 and $65,800. The area previously acted as a key floor during February and March before breaking during the sharp selloff earlier this month. BTC price briefly reclaimed the zone before slipping back underneath it.

Momentum indicators remain mixed. The daily RSI has recovered from oversold territory but remains below the neutral 50 mark, while the MACD continues to trade beneath its signal line despite narrowing bearish momentum.

On the four-hour chart, Bitcoin has also fallen back below the 61.8% Fibonacci retracement level near $65,016 after failing to sustain a breakout above the 50% retracement around $66,829.

According to analyst Kamile Uray, the market is now closely watching whether support around $63,700 can hold.

“In deep declines, we will be tracking the 60000 level. This level must be held. Otherwise, the decline deepens further.”

On the positive side, Uray added that $67,500 remains the first major resistance zone, while a sustained move above $74,500 would be required to restore a stronger bullish structure.

Meanwhile, CoinGlass liquidation heatmaps show a dense concentration of leveraged positions sitting above current prices. Commenting on the setup, crypto analyst Daan Crypto Trades noted that “$68K is the biggest one to watch in the short term,” adding that the largest liquidity clusters now sit above the market after Bitcoin swept liquidity beneath $60,000 earlier this month.

Fed guidance and Middle East tensions could determine the next move

Macro developments remain the primary risk factor heading into the Fed announcement.

While falling oil prices have eased some inflation concerns, geopolitical uncertainty has persisted after Iran accused Israel of violating a Lebanon truce dozens of times and warned of a “harsh response” if attacks continue.

Tehran has also linked any final agreement with Washington to sanctions relief, the release of frozen assets, and an Israeli withdrawal from Lebanon.

The combination of Fed uncertainty, geopolitical risks, and persistent institutional caution has kept Bitcoin below major resistance despite recovering from its June lows.

A break above $68,000 could expose the next liquidity zones near $74,000 and $78,000, where large concentrations of leveraged positions remain.

On the downside, losing support around $63,700 would place renewed focus on $60,000. A decisive move below that level could open the door toward the $55,000–$50,000 region highlighted by several market analysts.

XRP price traded near $1.20 on June 17 as buyers tried to hold a narrow support zone while ETF inflows and spot demand improved.

According to crypto.news market data, XRP fell 3.29% over 24 hours, with trading volume at $1.76 billion. The token ranged between $1.20 and $1.25, while its market cap stood at about $74.45 billion.

XRP price holds $1.20 as ETF inflows return

The latest pullback came after XRP briefly pushed above $1.26 and reached as high as $1.2996, according to levels tracked by analyst EGRAG Crypto. He said the next task is to see whether XRP can turn old resistance into new support.

EGRAG wrote that holding above $1.19 keeps the “structure remains bullish,” while a move below that level could open a retest of lower support. He also said a loss of $1.14 would weaken the setup again.

ETF flows remain a key support factor. XRP products recorded a second straight week of inflows, adding $10.68 million and lifting cumulative inflows near $1.44 billion.

Daily flows also improved. According to SoSoValue, XRP products added $5.30 million on June 16, up from $2.82 million on June 15. Total net assets still slipped to $1.06 billion from $1.11 billion, showing that price weakness offset some demand.

As previously reported by crypto.news, XRP-linked products had already outpaced Bitcoin and Ethereum funds for five straight weeks. That demand has not stopped the chart from staying weak, but it has helped keep XRP above the deeper $1.10 area.

Spot demand clashes with Binance short pressure

CryptoQuant analyst Amr Taha said XRP reclaimed $1.20 while spot cumulative volume delta rose to $267.4 million, its highest level since mid-May. He said the same metric stood near negative $177 million on April 12.

The reading suggests spot buyers have returned across exchanges. That matters because spot buying reflects direct demand for XRP, not only leveraged trading.

The derivatives market tells a different story. Taha said Binance perpetual CVD fell to a record low near negative $792.5 million, down from about negative $218 million on May 12.

This means Binance perpetual traders kept selling even as spot demand improved. With open interest near $251 million, leverage has not fully left the market. If spot buyers keep absorbing that pressure, short positions may face stress. If demand fades, the same setup may increase downside risk.

Moreover, BankXRP also pointed to a deposit and withdrawal pattern on Binance. The analyst said XRP printed the same exchange flow signal that appeared near the last two cycle bottoms, though he warned the sample size is small.

Technical setup keeps XRP inside the range

Bollinger Bands show XRP trading near the middle band. Price was near $1.1957, close to the middle band around $1.1948, while the upper band sat near $1.3471 and the lower band near $1.0425.

That position shows XRP is not at a clear volatility extreme. The bands also look compressed compared with earlier moves, which points to consolidation rather than a confirmed breakout.

A move toward the upper band near $1.35 would show better strength. A rejection from the middle band would keep XRP range-bound and leave sellers in control of short-term direction.

The RSI stood at 45.71, still below the neutral 50 level. Its moving average was near 34.62, meaning downside pressure has eased, but momentum has not fully turned positive.

Key XRP levels decide the next move

EGRAG’s daily map places $1.11 as the survival zone, $1.21 as first strength, and $1.28 as the next level where structure improves. He said $1.35 to $1.38 would show stronger buyer control, while $1.51 remains the major breakout area.

That view matches the current range. XRP must hold $1.19 first, then reclaim $1.28 and $1.35 before a wider recovery can gain force. A break below $1.14 would put $1.11 and $1.05 back in focus.

As crypto.news reported earlier, XRP had already faced pressure near $1.14 after ETF outflows and whale selling weakened the market in early June. More recent coverage also noted that whale accumulation and $1.30 resistance remain key factors after the latest rebound.

The market now has two competing signals. ETF inflows and spot CVD point to demand, while weak RSI, compressed Bollinger Bands, and heavy Binance short pressure show caution.

The US dollar remains well supported against most major currencies, although the next phase of its movement will largely depend on the outcome of the Federal Reserve meeting. Investors are adopting a cautious stance ahead of the interest rate decision, the release of updated FOMC economic projections, and Jerome Powell’s press conference. Particular attention will be paid to policymakers’ forecasts, as these could reshape expectations regarding the number of potential rate cuts before the end of the year.

Market participants will also focus on a fresh batch of US economic data. Today’s retail sales figures are expected to provide further insight into the strength of consumer demand in the United States. Investors will also monitor Canada’s New Housing Price Index ahead of the Fed decision. While the Fed is widely expected to leave rates unchanged, the key driver for markets will be any signals regarding the future path of monetary policy and the timing of possible rate cuts.

USD/JPY

Sellers in USD/JPY managed to trigger a correction towards 159.50 last week. However, they failed to develop a sustained downward move, and the pair is once again trading above 160.00. Technical analysis of USD/JPY points to range-bound trading within the 159.50–160.70 corridor. It appears that investors require clearer guidance from the Fed regarding the future direction of monetary policy.

Key events for USD/JPY:

• Today at 15:30 (GMT+3): US Core Retail Sales;
• Today at 16:30 (GMT+3): speech by US President Donald Trump;
• Today at 21:00 (GMT+3): Federal Reserve interest rate decision.

USD/CAD

USD/CAD reached fresh yearly highs last week and tested the psychological resistance level at 1.4000. Following the breakout above the year’s previous peak, the pair has entered a consolidation phase within the 1.3950–1.4020 range. A sustained move below 1.3950 could trigger a corrective decline towards the 1.3850–1.3900 area. Conversely, a decisive break and close above 1.4000 could pave the way for further gains towards the next significant resistance zone near 1.4130.

Key events for USD/CAD:

• Today at 15:30 (GMT+3): Canada New Housing Price Index;
• Today at 17:30 (GMT+3): US Crude Oil Inventories;
• Tomorrow at 15:30 (GMT+3): Canada Raw Materials Price Index (RMPI).

The dollar remains close to important technical levels against both the Japanese yen and the Canadian dollar, but the next directional move is likely to be determined by the outcome of the Federal Reserve meeting. Should the Fed maintain a hawkish tone and reaffirm its cautious approach to rate cuts, USD/JPY and USD/CAD may extend their gains and attempt to break through current resistance levels. A more dovish message from Powell, however, could encourage profit-taking in the dollar and lead to a corrective pullback following the strong rally seen in recent weeks.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Bitcoin (BTC) risked wiping out its Iran truce gains and returning toward the $60,000 psychological support as the Bank of Japan (BoJ) raised its interest rates to their highest level in 30 years.

Key takeaways:

• BTC has averaged a 5.74% decline in the 30 days after the last four BoJ rate hikes.
• A repeat of previous post-hike drawdowns puts Bitcoin’s downside range between $62,700 and $56,700.

Previous BOJ hikes warn of 30-day Bitcoin losses

On Tuesday, the BoJ raised its short-term policy rate by 25 basis points to 1.0% on June 16, marking Japan’s highest interest-rate level since 1995.

The move came as policymakers responded to persistent inflation risks from higher energy costs and lingering Middle East supply disruptions.

Bitcoin dropped by nearly 2.5% from its local high at $67,250, but was maintaining its June gains. Its historical performance after BoJ rate hikes, however, points to downside risks.

In the 30 days after the last four BOJ hikes, Bitcoin averaged a 5.74% decline. BTC fell 5.59% after the March 2024 hike, 10.89% after the July 2024 hike, and 14.77% after the January 2025 hike.

BTC/USD three-day chart. Source: TradingView

The only positive case came after the December 2025 hike, when BTC gained 8.31% over the following 30 days. However, that rebound followed Bitcoin’s sharp correction from its October 2025 peak, suggesting the market was already deeply oversold before the BoJ decision.

Applying Bitcoin’s average 5.74% post-BoJ decline to its current price near $66,500 puts the downside target near $62,700, just above the $59,000–$62,000 demand zone (red area in the chart below).

BTC/USD three-day chart. Source: TradingView

A sharper pullback matching the July 2024 post-hike drop would send BTC toward $59,200, while a repeat of January 2025’s decline would imply a fall to $56,700.

Broader post-BoJ drawdown phases have been even steeper, with Bitcoin losing between 26% and 38% after Japan’s rate decisions since March 2024, a chart shared by crypto analyst Gerla shows.

BTC/USDT three-day chart. Source: TradingView/Gerla

BOJ hikes have often arrived near US recessions

BoJ rate-hiking cycles have historically coincided with US recessions, with the COVID shock being the main exception, noted André Dragosch, European head of research at Bitwise, in a Tuesday post.

BoJ’s unsecured overnight call rate vs. US recession periods. Source: Bloomberg Terminal/André Dragosch

The pattern suggests the BoJ often tightens policy late in the global cycle, when inflation pressure is already high, and liquidity conditions are becoming less supportive for risk assets.

Japan has been a key source of cheap money for global markets for years.

When Japanese rates were near zero, traders could borrow yen at low cost and use that money to buy riskier assets elsewhere, including stocks and crypto. But as Japan raises rates, that trade typically becomes less attractive.

Related: Bitcoin recovery rests on US-Iran deal as momentum remains weak

Some traders may then cut their borrowed positions to reduce risk. That can hurt assets like Bitcoin, which often falls harder when global investors become more cautious.