Bank of Japan's rate hike impacts Bitcoin price; historical declines inevitable? Can it hold the $90,000 this time?

When the Bank of Japan’s rate hike kicks in, the global cryptocurrency market suddenly experiences turbulence. As of the latest data, Bitcoin’s price hovers around $90,360, showing a clear pullback from previous highs. For holders, this is not just price fluctuation but a test related to the global liquidity restructuring.

The core issue behind the BOJ’s rate hike decision is that it is far from an isolated event. Over the past decades, the yen has become a “cheap funding machine” in the global financial system due to its ultra-low interest rates. Traders and institutional investors have continuously borrowed yen through this mechanism, then shifted funds into global stocks, bonds, and crypto assets. Now, this long-term liquidity party faces a significant turning point.

End of Yen Arbitrage Trading, Global Liquidity Faces Restructuring

According to data from the prediction platform Polymarket, the market consensus expects the BOJ to raise rates to 0.75%, hitting a nearly 20-year high. Although this figure still appears relatively low from a global perspective, its symbolic significance is profound—rising borrowing costs for the yen mean that large positions built on “ultra-low interest yen” will be forced to face liquidation pressures.

Analyst Mister Crypto pointed out, “For decades, the yen has been the preferred currency for borrowing and converting into other assets. But as Japanese bond yields rapidly climb, this arbitrage trading is shrinking.” This implies investors will need to sell risk assets to repay debts, with Bitcoin, as a representative of risk assets, bearing the brunt.

Historical Trends Post-Rate Hike, Can the 20%-30% Drop Pattern Repeat?

Market pessimism is not unfounded. Historical records show:

• After the BOJ raised rates in March 2024, Bitcoin dropped about 23%
• After the BOJ raised rates in July 2024, Bitcoin dropped about 25%
• After the BOJ raised rates in January 2025, Bitcoin fell more than 30%

This series of data forms a concerning pattern. Analyst 0xNobler issued a warning: “Every time Japan raises rates, Bitcoin crashes 20% to 25%. Based on this pattern, this rate hike could push Bitcoin below $70,000.”

If this prediction proves true, the current price of $90,360 will once again fall below support, and investors will face not only technical corrections but also systemic liquidity risks. The market generally considers a “test of $70,000” as part of risk assessment, with the end of year and the turn of the year being the most sensitive time windows.

Market Divergence Intensifies, Optimists See Long-term Buying Opportunities

However, not all voices are pessimistic. Some analysts present a completely different logic.

Macro analyst Quantum Ascend believes this is not merely a liquidity contraction but an “opportunity for systemic transformation.” The core idea is that if the Federal Reserve in the US initiates a rate-cutting cycle simultaneously, dollar liquidity will be injected into the market, weakening the dollar’s strength. Meanwhile, the BOJ’s moderate rate hikes only support the yen and are insufficient to destroy global liquidity.

In this scenario, capital will rotate into risk assets with asymmetric upside potential—and the long-term fundamentals of cryptocurrencies provide such opportunities. This perspective views the current price decline as a “buying opportunity” rather than a “signal to exit.”

Liquidity Exhaustion by Year-End, Risk Assets Face Tests

Although debates are intense, the short-term market vulnerability cannot be ignored. Analyst The Great Martis pointed out that the bond market is already forcing the BOJ to act, which could trigger a wave of arbitrage unwinding, impacting global stock markets. Major indices have shown “head-and-shoulders” patterns, and global yields are rising in unison, indicating systemic pressure is accumulating.

Bitcoin’s price trend also reflects this uncertainty. Since the beginning of the year, the price has been flat and directionless. Analyst Daan Crypto Trades emphasized that early in the year, market liquidity was low, and investor confidence was weak, which will inevitably lead to volatile price swings. Additionally, Bitcoin’s sensitivity to liquidity changes driven by Japan is abnormal, making this rate hike an influential catalyst.

Investment Insights: Waiting for Liquidity Stabilization Signals

Whether it’s the potential replay of 20%-30% historical declines or a rebound after long-term liquidity stabilizes, the key lies in how to respond to the global liquidity restructuring. Bitcoin’s ability to find a balance in the dollar liquidity environment depends on the interaction of the Fed and BOJ policies in the coming weeks.

In the short term, Bitcoin around $90,360 faces a critical test of the $70,000 support level. In the long term, rate hike cycles often lay the groundwork for the next upward phase of risk assets. Investors’ wisdom may not lie solely in betting on rate hikes but in deeply understanding and flexibly responding to how global liquidity will adapt to this upheaval.