The financial world is watching the Bank of Japan (BoJ) building. With the monetary policy meeting scheduled for tomorrow, December 19, the cryptocurrency markets have begun to show signs of fatigue. The potential increase in interest rates to 0.75% is not just a macroeconomic figure; it is the trigger for the dismantling of the yen carry trade, one of the largest sources of liquidity for risk assets like Bitcoin.
The end of cheap money: What is the Yen Carry Trade?
For years, investors have leveraged Japan's nearly zero interest rates to borrow in yen and invest that capital in high-yield assets, including cryptocurrencies.
With the BoJ's rate hike and the recent drop of the USD/JPY pair toward 150 yen, this arbitrage is no longer profitable. The result is a forced liquidation: to repay their debts in a strengthening yen, large funds must sell their positions in crypto assets, injecting massive bearish pressure into the market.
Reaction of major Japanese crypto assets.
While the entire market feels the impact, three specific assets are at the eye of the storm due to their direct connection to the Japanese financial ecosystem:
1. Bitcoin (BTC): The liquidity barometer
Bitcoin has historically acted as the first domino to fall in response to BoJ decisions. As of December 2025, BTC has already experienced a correction close to 6.6%, retreating from its highs. If the rate hike is confirmed tomorrow, analysts suggest that the support at $85,000 could be compromised by a massive outflow of institutional capital.
2. XRP (XRP): Between adoption and volatility
XRP is perhaps the crypto asset most linked to Japan. With the giant SBI Holdings integrating XRP into the benefits for its shareholders for 2025 and more than 60 Japanese banks using Ripple's technology, XRP faces a paradox:
In the short term: Suffers from the volatility of the Japanese currency market. Social sentiment has fallen to 'deep fear' levels according to data from Santiment.
In the long term: The regulatory clarity from the FSA (Financial Services Agency) and its real use in cross-border payments in Asia maintain a solid support base.
3. JasmyCoin (JASMY): The local refuge
Known as the national cryptocurrency of Japan, JASMY often reflects the sentiment of local retail investors. Given the uncertainty of the BoJ, we are likely to see a migration of retail investors towards cash (Yen) to protect their savings ahead of the 2026 tax reform, which promises to reduce the crypto tax to 20%.
Conclusion: Opportunity or Catastrophe?
Despite the immediate turbulence, 2025 marks a year of maturation for Japan. The transition of cryptocurrencies from the Payment Services Act to the Financial Instruments and Exchange Act is attracting traditional investors who previously feared volatility.
If the market survives this month's Yen Shock, the new fiscal structure and yen stability could turn Japan into the strongest crypto hub of 2026.
Risk Warning: Volatility could increase dramatically over the next 48 hours. Caution is advised when using leverage.
