The Bank of Japan's expected rate hike is overwhelmingly priced in, with markets assigning it a 98% probability. This is why Bitcoin has only shown a modest pre-meeting drop, unlike the historical pattern of sharp declines after previous hikes.
Here is a breakdown of the key market dynamics and what to watch next.
Why This Time Is Fundamentally Different
While history shows a clear pattern—Bitcoin fell 23% (March 2024), 26% (July 2024), and 30% (January 2025) following BOJ hikes—the current situation has crucial differences
The Market is Prepared: This hike to 0.75% (a ~30-year high) has been telegraphed for months. Japanese bond yields have already surged in anticipation, meaning the market has adjusted before the decision.
The Global Policy Mix: Unlike previous hikes, this one coincides with the U.S. Federal Reserve cutting rates. Some analysts argue that this "regime shift" could weaken the US dollar and ultimately support risk assets like crypto, even if there is short-term volatility. The focus is shifting to the BOJ's guidance for 2026 rather than the hike itself.
📈2 Potential Scenarios
The market's reaction will depend on the BOJ's signals about future policy. Here are the key scenarios analysts are watching:
A "Hawkish Hike" & Sharp Decline
· Trigger: The BOJ hikes and signals a faster pace of future increases.
· Mechanism: This could accelerate the unwinding of the "Yen Carry Trade", Forcing global investors to sell assets like Bitcoin to repay yen loans.
· Potential Impact: Bitcoin could see a sharp, double-digit percentage decline, potentially testing the $68,800 - $70,000 support zone mentioned by analysts.
A "Dovish Hike" & Relief Rally
· Trigger: The BOJ hikes but stresses a slow, cautious pace for any further moves.
· Mechanism: This would align with expectations and ease fears of an aggressive liquidity drain. The reduction of uncertainty itself could be positive.
· Potential Impact: Bitcoin could experience a "sell the rumour, buy the news" relief bounce, with a retest of higher resistance levels.
