The Bank of Japan (BOJ) raised its policy interest rate by 25 basis points to 0.75% on December 19, marking the highest level in nearly 30 years, reflecting a gradual end to the country's accommodative monetary policy.
However, despite being a significant turning point in history and warnings about tight global liquidity, Bitcoin has reacted minimally, rising less than 1% and remaining in the USD 87,000 range.
The BOJ raised rates by another 25 basis points. Why is Bitcoin still stable?
This calm response is very different from past history, as in previous instances when the BOJ raised interest rates, there was often severe selling in the crypto market, especially when the yen carry trade was unwound and global liquidity tightened.
But this time, traders seem unfazed, indicating that this interest rate hike has been fully priced in ahead of the announcement. Most market participants have already anticipated this decision.
This interest rate hike in Japan represents a symbolic shift from maintaining near-zero rates for decades that had made the yen a cornerstone of the global capital market, as the low-cost yen facilitated borrowing to increase leverage in stocks, bonds, and cryptocurrencies.
As Japan's yields rise and the spread with global rates narrows, such speculation becomes less attractive and may force investors to reduce risk. However, Bitcoin's calm reaction reflects that the market had already priced this in.
However, from an analyst's perspective, the key issue is not this interest rate hike directly, but what follows.
Analyst Marty Party has stated that the market has priced in a nearly certain 25 basis point interest rate hike, which would become Japan's highest policy interest rate in about 30 years. Although this hike has largely been anticipated, the forward guidance from Governor Ueda during the press conference has become the focal point for everyone, as signaling the next interest rate hike could have extended implications.
As a result, this forward guidance may become a key factor. The Bank of Japan has signaled that it remains prepared to raise interest rates further, possibly up to 1% or more by the end of 2026, depending on wage growth and sustained inflation.
This direction continues to pressure risk assets, even though the initial move did not cause immediate volatility.
Bitcoin remains strong while alternative coins face continued liquidity tightness.
Analysts argue that Bitcoin's strength may reflect positive signals, with Blueblock pointing to historical patterns and noting differences from previous reactions.
Analysts have noted that the BOJ has just raised the interest rate to 0.75%, marking the end of an era of accommodative monetary policy that has lasted for decades and narrowing the gap with global yield rates. History shows that each time a previous tightening of policy has occurred, Bitcoin typically drops 20–30% when the yen carry trade is unwound and liquidity tightens. However, when the interest rate hike is fully priced in and BTC remains stable around USD85k–USD87k, this may be the correction timing that buyers are waiting for.
However, not every part of the crypto market can handle this equally well. Altcoins, which are usually more sensitive to changes in liquidity, still face risks if interest rate hikes in Japan accelerate.
The prospect of sustained higher interest rates until 2026 indicates that this challenge may extend beyond a one-off acute impact.
The BOJ has signaled a readiness to raise interest rates again, possibly to 1% or more by the end of 2026, depending on wage growth and sustainable inflation. There is no mercy for altcoins, Money Ape commented.
The stability of Bitcoin reflects a market that has had ample time to prepare for the BOJ's decision, and whether this strength will persist will depend more on Japan's future interest rate hike policy than on the hike in December. It also hinges on how global liquidity adjusts after the end of one of the longest economic support measures in history.
