The yen weakened to 158.21 per dollar on Oct. 1 after traders cut the implied probability of a Bank of Japan rate increase by Oct. 30 to below 20% from more than 30% a day earlier. The move sustained the appeal of yen-funded carry trades, in which investors borrow cheaply in yen to purchase higher-yielding assets, but left markets exposed to a sharp reversal if the BOJ tightens further or authorities intervene to support the currency. Japan's 10-year government bond yield recently reached 3.075%, its highest level since 1996, after the BOJ raised its policy rate to 1.25% in September. A rapid yen appreciation could force leveraged investors to close positions, potentially affecting liquid risk assets including cryptocurrencies. During an August 2024 carry-trade unwind, total crypto market capitalization fell nearly 18% and Bitcoin dropped to about $49,000.