Bank of Japan Hikes Rates to 0.75%: Is Bitcoin Headed for a Slide?

Central banks are tightening the screws. The Bank of Japan just joined the club, nudging its key rate to 0.75%. For traditional markets, it's another ripple in the monetary pond. For crypto? It's a potential tremor.

The Liquidity Squeeze Playbook

Higher rates suck cheap capital out of the system. It's Finance 101—risk assets often flinch when the free-money party ends. Bitcoin, the ultimate risk-on asset, doesn't operate in a vacuum. When global liquidity contracts, speculative capital gets defensive.

Bitcoin's Resilience Test

But here's the twist: crypto has been writing its own rulebook. It's weathered Fed hikes, ECB pivots, and regulatory crackdowns. Each shock was met with volatility, then often, a defiant rally. The narrative is shifting from 'digital gold' to an uncorrelated asset class—one that might just bypass traditional monetary plumbing altogether.

The Verdict: Pressure, Not Panic

Expect short-term pressure. Macro headwinds are real. But long-term? Bitcoin's value proposition—a decentralized, finite, borderless asset—grows stronger as faith in centralized monetary tinkering wanes. This isn't 2022. The market structure is mature, institutional adoption is baked in, and the hodler base is granite.

So, will Bitcoin slide? Maybe for a tick. But betting against an asset designed to thrive in monetary uncertainty is like trusting a central banker's forecast—a classic move for the historically optimistic.

BOJ said the decision was unanimous

Members of the BOJ policy board voted unanimously. They agreed to raise the short-term policy rate from 0.5% to 0.75%. The decision came after a two-day meeting that began on Thursday.

As reported by Cryptopolitan, the outcome was anticipated. Many economists foresaw it. This is the central bank’s first rate hike since January of 2025.

The BOJ has been carefully considering when to raise rates. It is watching the impact of US tariffs on Japan’s economy and monitoring wage growth.

Uncertainties about tariffs have eased. Japanese firms are expected to raise wages next year, according to a statement from the bank.

Japan is the fourth-largest economy in the world. The yen is gaining some strength against the US dollar and other major fiat currencies. For the Japanese people, this means cheaper fuel and imported goods.

Following the BOJ announcement, Japan’s 10-year government bond prices slid further after months of continuous pressure.

Yields rise as prices fall. This drove yields above 2% for the first time since 2006, pointing to continued weakness in bond prices.

Is Bitcoin going downhill?

Due to the yen carry trade, Bitcoin could slide by 30%. The yen carry trade involves borrowing cheaply in yen to invest in higher-risk assets. Investors may start offloading their risky investments in assets such as Bitcoin and Ether, driving the market further down.

However, crypto entrepreneur Arthur Hayes has been advocating for a weaker yen. Earlier in the day, Hayes voiced his input about a weaker Japanese yen. He said, “Don’t fight the BOJ: -ve real rates is the explicit policy.”

Don’t fight the BOJ: -ve real rates is the explicit policy. $JPY to 200, and $BTC to a milly. pic.twitter.com/PdZh87ruVI

— Arthur Hayes (@CryptoHayes) December 19, 2025

Hayes predicts that the JPY will jump to 200 against the dollar. This scenario will drive capital into the crypto market, pushing bitcoin to $1 million.

But the Bank of Japan governor, Kazuo Ueda, said real interest rates remain deeply negative. He added that interest rates will continue to rise and the BOJ will not stop if economic data aligns with its forecast. The governor did not offer more details on the pace of interest rate increase.

The upcoming weeks will reveal the direction of the crypto market. As Christmas and New Year’s approach, crypto markets could trade sideways or slide further due to the holidays.

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