Bank of Japan Raises Rates to 0.75%: Will Bitcoin Crash in December 2025?
- Why Did the BOJ Raise Interest Rates?
- How Are Cryptocurrencies Reacting?
- The Yen Carry Trade Threat
- What’s Next for Crypto Markets?
- FAQ: Your Burning Questions Answered
The Bank of Japan (BOJ) just hiked interest rates to 0.75%, marking its first increase since January 2025. While bitcoin briefly rallied to $88,176.99, analysts warn of a potential 30% drop due to yen carry trades. Meanwhile, crypto entrepreneur Arthur Hayes predicts a weaker yen could send BTC to $1 million. With holiday volatility looming, here’s what you need to know.
Why Did the BOJ Raise Interest Rates?
The Bank of Japan unanimously voted to increase short-term rates from 0.5% to 0.75% after a two-day meeting ending December 19, 2025. Governor Kazuo Ueda cited easing uncertainty around US tariffs and expected wage growth in 2026 as key factors. This MOVE sent 10-year Japanese government bond yields soaring above 2% for the first time since 2006 – a clear signal of shifting monetary policy. Data from TradingView shows the yen strengthening 1.8% against the dollar post-announcement.
How Are Cryptocurrencies Reacting?
Surprisingly, Bitcoin climbed to $88,176.99 (per CoinMarketCap) immediately after the news, with Ether reaching $2,976.43. But don’t break out the champagne yet – both assets remain 7-9% down over the past week. The BTCC research team notes this could be a classic "buy the rumor, sell the news" scenario, especially with year-end liquidity drying up.
The Yen Carry Trade Threat
Here’s where things get spicy. For years, traders borrowed cheap yen to invest in high-risk assets like crypto. Now, with rates rising, we might see:
- Massive unwinding of leveraged positions
- A 30% BTC price correction (as warned by Nomura analysts)
- Increased volatility through January 2026
What’s Next for Crypto Markets?
Between BOJ policy shifts and holiday thin trading, expect turbulence. Historical data shows December tends to be either:
- A Santa rally (2017, 2020)
- A bloodbath (2018, 2022)
FAQ: Your Burning Questions Answered
Will Bitcoin drop below $60,000?
Possible but unlikely before January. The $75,000 support level has held strong through three tests this quarter.
Should I buy Ether now?
The BTCC team suggests waiting for clearer signals – ETH’s correlation with traditional markets has increased to 0.78 recently.
How long will BOJ rate hikes continue?
Governor Ueda implied gradual increases through 2026, contingent on wage growth hitting 3%+.
