Recently, expectations for the Bank of Japan to raise interest rates again have continued to heat up, with the market widely predicting that its policy interest rate will be raised to 0.75%. Looking back at the last interest rate hike, the cryptocurrency market experienced significant turbulence, with Bitcoin ($BTC ) and Ethereum ($ETH ) prices falling sharply. However, unlike before, the market sentiment this time appears relatively calm, and the 'risk-off scenario' does not seem to be simply replayed. Behind this is a profound change in market pricing logic and the combined effect of multiple buffers.
I. Anticipated Ahead: The market has already 'priced in' the interest rate hike
The reason the Bank of Japan's interest rate hike this time has less deterrent power is primarily because market expectations have been fully absorbed. Unlike sudden 'black swan' events, this interest rate hike is a 'gray rhino' that the market has fully anticipated.
1. Treasury yield 'speaks': Real financial market expectations are often reflected in prices. Even before the interest rate hike decision was announced, the Japanese government bond market reacted sharply. Data shows that the yield on Japan's 10-year government bonds has approached 1.95%, reaching a near 18-year high. More critically, the yield on 30-year government bonds, seen as an indicator of long-term economic confidence, has repeatedly set historical highs. The yield curve has shifted upward across the board, clearly indicating that investors had already priced in expectations for the 'normalization of Bank of Japan monetary policy', with the interest rate hike itself merely confirming this expectation.
2. Buffer for speculative positions: Market analysis indicates that the net long positions in yen held by speculators are at relatively high levels. This means that the room for further rapid inflows of bullish yen and bets on interest rate hikes in the short term is limited, thereby weakening the potential for sharp fluctuations in exchange rates and cascading reactions that may occur upon policy announcements.
II. Macro environment: The Federal Reserve's 'pressure relief valve' and the new market paradigm
The current global macro landscape is starkly different from the last time Japan raised interest rates, forming a crucial buffer.
1. The Federal Reserve's easing hedge: Just this week, the Federal Reserve announced a 25 basis point rate cut and introduced liquidity support measures. The two major global central banks exhibit a situation of 'one easing, one tightening' in monetary policy. The Federal Reserve's easing tendency has, to some extent, hedged against the global tightening effects brought about by Japan's liquidity tightening, providing breathing room for risk assets. Historical data also shows that the global liquidity environment has a far greater impact on the crypto market than the actions of a single central bank.
2. Paradigm shift in crypto market pricing logic: The crypto market in 2025 is no longer an isolated 'tech market'. Reviewing the year's trends, a clear 'policy-driven' main line can be seen. Cryptocurrencies, especially Bitcoin, have seen unprecedented correlations between their price fluctuations and U.S. macro policies and geopolitical factors. Whether it's the Trump administration's pro-crypto executive orders, stablecoin legislation, or the '1011 crash' triggered by tariff policies, it is evident that crypto assets can no longer remain unaffected in the face of systemic macroeconomic risks. Within this new paradigm, the Bank of Japan's interest rate hike, as a single factor, has its influence weighed within a more complex global policy game, naturally diluting its effects.
III. Future path: Focus on 'neutral interest rate' guidance and long-term liquidity impacts
Despite the easing of this shock, the long-term impact of the Bank of Japan's monetary policy shift on the market cannot be ignored.
· The rate hikes are not over, where is the end point?: Market insiders believe that 0.75% may not be the end point of this round of rate hikes. Discussions among officials indicate that rates may need to rise above 0.75%, even approaching 1%, to reach the so-called 'neutral interest rate' range (estimated between 1% and 2.5%). Therefore, the latest analysis on neutral interest rates after next week's central bank meeting will become a key signal indicating the future pace of rate hikes. The market currently expects the final rate to settle around 1.25%.
· The end of the cheap credit era: From a more macro perspective, Japan's decades-long ultra-loose monetary policy (zero/negative interest rates) is coming to an end. This means that an important and cheap source of liquidity for the global financial market is tightening. In the long run, this may lead to a reduction in global low-cost capital, with leveraged funds in both traditional and crypto markets being restricted, potentially increasing market volatility. Investors need to reassess their leverage and asset allocation strategies.
Conclusion: From 'reflex' to 'complex assessment'
In summary, the crypto market's 'calm' reaction to this interest rate hike by the Bank of Japan marks an improvement in market maturity. It no longer reacts with a simple reflex to a single macro event but conducts a more complex assessment:
1. Expectation management: The market prices in events with clearly defined expectations in advance.
2. Global trade-offs: Consider the events in the context of the global central bank policy game (especially the movements of the Federal Reserve).
3. Paradigm adaptation: A deep understanding that one has become a part of the macro narrative, with the roots of volatility increasingly shifting toward policy and geopolitical factors.
Therefore, although interest rate hikes will come, the market has built a dual buffer of 'expectations' and 'hedges'. For investors, rather than worrying about a single interest rate hike event, it is more important to closely monitor the Bank of Japan's statements on neutral interest rates and the long-term impacts of tightening global liquidity conditions. In the policy-driven new cycle of crypto, understanding the macro narrative is more important than chasing technical volatility.
