Ahead of the Bank of Japan’s expected additional rate hike on December 19 (25 bps), the current market setup suggests that Bitcoin’s downside may already be unfolding, rather than materializing after the announcement. This view is supported not only by price action but also by on-chain data.
Looking first at exchange netflows, previous BoJ hiking phases showed sharp spikes in BTC inflows to exchanges around the announcement, signaling concentrated selling pressure. In contrast, recent data indicates that exchange inflows have already increased ahead of the event, meaning the deterioration in supply-demand dynamics is happening earlier. This implies investors are proactively reducing spot exposure and risk before the BoJ decision.
Funding rates tell a similar story. During past rate hikes, funding rates dropped sharply around the announcement as long positions were flushed out and shorts became dominant. Today, funding rates are already declining and unstable, indicating leverage is being unwound in advance. This reflects pre-event caution rather than post-event panic.
What makes this cycle different is that the BoJ’s hawkish shift has been widely discussed for months. Yen carry unwinds and global liquidity tightening have been well anticipated. As a result, the shock has shifted forward in time, with both price action and on-chain indicators showing that adjustment is already underway. The key question now is not the rate hike itself, but whether the yen strengthens further after the announcement—or whether markets react with a “sell the rumor, buy the fact” reversal. This time, the game may already be in progress.
Written by XWIN Research Japan
