Traders love volatility, but of late, bitcoin (BTC) has offered none. Wednesday’s Federal Reserve rate hike has also failed to wake the cryptocurrency from its slumber.

Perhaps the Bank of Japan (BOJ), the world’s third-largest central bank and the only heavyweight maintaining a very loose pro-liquidity policy, might do the trick.

According to several investment banks, the BOJ on Friday will likely soften its grip on the country’s bond markets, potentially influencing global bond markets, exchanges rates and liquidity conditions. Bitcoin and cryptocurrencies, in general, are sensitive to changes in global liquidity conditions.

Since September 2016, the BOJ has been running a yield curve control (YCC) program, committing to purchase as many government bonds as required to keep the 10-year government bond yield near 0%. The perpetual bond buying has added to global liquidity and has been a major source of downward pressure on bond yields across the advanced world, as RBC Wealth Management noted.

In December, the BOJ retained the target while allowing the yield to fluctuate in the +/-50 basis points (bps) band. On Friday, the bank might widen the band to 100bps, indirectly tapering the liquidity-boosting bond purchases.

“Broadly speaking, initial steps could include either widening the 10-year JGB yield band or focusing on the shorter maturity zone. Our base scenario is the latter, though it could be a close call. The former option may be viewed as desirable, particularly given that the effects of band widening is likely easier to anticipate for the market,” Goldman Sachs’ economics research team said in a note to clients on July 21.

“However, assuming that the BOJ maintains its 10-year target at 0%, then widening the band to ±100 bp from ±50 bp at present, for example, would be akin to the BOJ effectively scrapping YCC or admitting it has lost the ability to control yields,” the research team added.

BNP Paribas also expects the BOJ to widen the YCC band to 100 basis points. On Wednesday, the IMF urged Japan to move away from YCC to prepare for eventual lift-off in interest rates from the current -0.1%.

These potential developments might appear inconsequential to the bitcoin market, but that’s not necessarily true. In the past, cryptocurrency has seen negative correlations with bond yields, bond market volatility, the dollar index, and global liquidity conditions. In other words, potential changes to BOJ’s YCC and the resulting volatility in traditional markets could bring volatility to the crypto market.

The YCC could affect financial markets through exchange rates, term premiums on sovereign bonds and global risk premiums, the IMF warned early this year.

For instance, Japanese yields might rise sharply on potential YCC tweak, eventually leading Japanese investors to sell their foreign bond holdings in favor of domestic bonds. That, in turn, would lift foreign bond yields and dent money flow into risk assets. (bond yields and bond prices move in opposite directions). Japan is the world’s largest creditor nation, with record net external assets of 418.63 trillion yen ($3 trillion) in 2022. Japanese investors have been on a foreign bond buying spree, given the low yields at home and relatively higher yields elsewhere.

“As this [BOJ] policy starts to reverse, it could contribute to causing global yields to rise, particularly as the move is happening at a time bond markets have been shaken by ongoing hiking cycles. This vulnerability was on display during the quasi run on U.K. sovereign bonds last fall,” RBC Wealth Management wrote early this year, explaining YCC’s global relevance.

Bitcoin changed hands at $29,470 at press time, representing a 0.4% gain on the day, per CoinDesk data.