The etymology is uncertain, but the most plausible source on the basis of both semantics and historical phonology appears to be unattested Vulgar Latin*c(h)araculum, which would have been a Latinized diminutive of Ancient Greekχάραξ(khárax, “stick”), from χαρακτήρ(kharaktḗr).
Another possibility is Late Latincassus or its diminutive, carassus(“empty”), eventually used to describe a crow's nest on a ship.
Certain cognates include Spanishcarajo, Galiciancarallo and Catalancarall. Attempts to attribute Italian same-meaning **** to the same etymon fail on phonological grounds, as the /r/ of carajo (or its absence in ****) remains unexplained, and no Latin phonological sequence develops as both /x/ in Spanish and /tts/ in Italian.