The Bank of Japan (BOJ) raised the policy interest rate by 25 basis points to 0.75% on December 19. This marks the highest level in nearly 30 years and represents a significant step towards exiting the ultra-loose monetary policy.
However, despite this historic step and warnings of global liquidity tightening, Bitcoin did not react significantly. The price rose only slightly below 1%, remaining around the $87,000 mark.
BOJ Faizi Raised by 25 Basis Points: Why Did Bitcoin Remain Stable?
This muted response stands in stark contrast to the past. Previous BOJ tightening periods had seen sharp sell-offs in the cryptocurrency market, particularly due to the unwinding of yen carry trades and decreasing global liquidity.
But this time traders remained indifferent to the situation. This indicates that the decision was already priced in. A large part of the market was expecting the decision in advance.
This interest rate hike by Japan represents a symbolic break from decades of nearly zero interest rate policy. The ability to borrow cheaply with yen supported high-leverage positions in stocks, bonds, and cryptocurrencies.
As Japanese bond yields rise and the gap with global interest rates narrows, these transactions are losing their appeal; investors may need to unwind their risky positions. Still, Bitcoin's calm indicates that the market is prepared.
According to analysts, the main issue is not just the interest rate hike but what will happen next.
Analyst Marty Party wrote: ‘The market is pricing in nearly certain 25 basis points hike at a level not seen in about 30 years. Since the hike is expected, the main focus will be on the forward-looking messages from President Ueda in the press conference: Signals of future hikes could amplify effects’ he said.
These forward-looking messages could be critical. BOJ is signaling that it is ready to raise interest rates to 1%, or even higher, depending on wage increases and the sustainability of inflation.
This outlook continues to put pressure on risky assets, even if the initial move did not create volatility.
Bitcoin Continues to Maintain Its Strength: Altcoins Face Long-Term Liquidity Crunch
Analysts believe that Bitcoin's resilience could be a bullish signal. Blueblock highlighted the divergence from historical examples.
The analyst wrote: ‘BOJ ended decades of loose monetary policy by cutting interest rates to 0.75% and narrowed the gap with global yields. In the past, every tightening phase led to sharp declines of 20-30% in Bitcoin due to the unwinding of yen carry trades and shrinking liquidity. However, this time the increase is fully priced in, and while BTC maintains the $85,000-$87,000 band, this situation could be the opportunity sought by those looking to buy the dip’ he said.
However, it is difficult to evaluate the entire cryptocurrency market with the same optimism. Altcoins seem likely to remain fragile in the event of Japan tightening more rapidly, as they are much more sensitive to liquidity.
The likelihood of keeping interest rates high until 2026 indicates that a long-term wind will blow rather than a temporary shock.
Money Ape commented: ‘BOJ signaled that it is ready to raise interest rates to 1% or higher by the end of 2026, depending on wage increases and persistent inflation. NO MERCY FOR ALTCOINS’ he said.
The stability in Bitcoin shows that the market has had ample opportunity to prepare for the Bank of Japan's (BOJ) decision. Whether this resilience will continue will depend not only on the interest rate hike in December but also on how aggressively Japan will continue its tightening steps. Additionally, how global liquidity adapts to the end of long-standing monetary policy support will also play an important role.
