BOJ Raises Rates to 0.75% After 30 Years, Bitcoin Faces $70K Risk
The Bank of Japan has made the bold move of raising its benchmark interest rate by a quarter of a percentage point – or 25 basis points
Quick overview
- The Bank of Japan has raised its benchmark interest rate by 25 basis points to 0.75%, marking the highest rate in a long time.
- This rate hike, agreed upon by all BOJ members, signals readiness for further action if necessary in 2026.
- Bitcoin has experienced significant volatility following the rate hike, with prices fluctuating between $85,000 and $88,000 due to the yen's weakness.
- Despite short-term risks, long-term trends for Bitcoin remain bullish, with potential gains expected between 2026 and 2028.
The Bank of Japan has made the bold move of raising its benchmark interest rate by a quarter of a percentage point – or 25 basis points – to 0.75%. And it’s been a long time since the BOJ set interest rates this high. This decision comes at a time when inflation is still giving the economy a hard time, but things are finally starting to look up.
BOJ boss Kazuo Ueda confirmed that all members of the Bank agreed to the rate hike, sending a message that they’re ready to do more if needed in 2026. This is the second time in 2025 that the Bank has hiked interest rates, following a similar 25bps bump back in January. The BOJ says that, despite real interest rates still in the red, the economy will continue to get a modest boost from the financial sector.
- The yen has been feeling the squeeze, falling to around 156 per US dollar since the rate hike.
- The 10-year US Treasury yield has been rising, climbing to 4.14% after earlier dipping.
- The US dollar index is also on the up, hitting 98.52 as investors start to think the Fed might not cut interest rates as much as they thought.
The markets are keeping a close eye on the yen, particularly to see whether traders will start unwinding their carry trades. But, for now, the risks are still low.
Bitcoin Volatility Spikes Post-BOJ Rate Hike
It’s nothing new – Bitcoin tends to react pretty badly to BOJ rate hikes because of all the unwinding of yen carry trades. And you can see this in the past: since 2024, each time the BOJ has hiked rates, Bitcoin has crashed by 23-31%. After the January 2025 rate hike, for instance, Bitcoin’s price plummeted by 31%, from $85,000 to $70,000.
As things stand, we’re seeing some pretty wild fluctuations in the price of Bitcoin – it’s currently bouncing between $85,000 and $88,000, influenced by the weakness of the yen and the rising strength of the US dollar.
Analysts are warning that we may see further selling in the near term, driven by liquidity issues and seasonal market factors. And today is “triple witching” day – which, if you didn’t know, is when the prices of options and futures can get pretty wild.
Long-term Outlook Still Looks Pretty Bullish For Bitcoin
Despite all the short-term risks and woes, the long-term trends look good for Bitcoin. In fact, on-chain data, institutional interest, and overall adoption trends all point to a bullish future over the next few years.
- Research outfit 10x says, even though the near term looks bearish, we might see some big gains for Bitcoin between 2026 and 2028.
- Keep an eye on support levels – if the price drops below $85,100, things could get pretty ugly.
- Remember that we’re heading into a period of seasonal volatility and macroeconomic factors – but, for those who can be patient, this could be a great buying opportunity.
All this shows that there’s a delicate balance among central bank moves, currency markets, and Bitcoin’s supply and demand. While we may see some wild volatility in the short term, this works out well for long-term holders.
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