Bank of Japan Rate Hike Could Trigger 20-30% Bitcoin Decline as Markets Price 98% Probability
A Bank of Japan rate hike, priced at 98% probability, may cause a 20-30% Bitcoin decline by unwinding the yen carry trade.Summary
Markets are anticipating a near-certain 25 basis point rate hike by the Bank of Japan (BOJ) at its December meeting, which has a 98% probability according to prediction markets like Polymarket. This move is viewed negatively for Bitcoin because it threatens the long-standing 'yen carry trade,' where institutions borrowed cheap yen to invest in global risk assets like crypto.
Historical data suggests that previous BOJ hikes have led to significant Bitcoin drawdowns, with drops of approximately 23% to 31% following hikes in March 2024, July 2024, and January 2025. Analysts caution that if this pattern repeats, Bitcoin could drop below $70,000, representing a 20% decline from current levels.
However, some analysts suggest a bullish outcome, arguing that simultaneous US Federal Reserve rate cuts could inject dollar liquidity and weaken the USD, leading to capital rotation into risk assets like crypto, framing it as a regime shift rather than a liquidity shock. Despite this, near-term fragility remains due to potential carry trade unwinding and rising global yields.
(Source：BeInCrypto)