Bank of Japan’s Reported Rate Hike Could Put Bitcoin Under Stress, Say Analysts

• Analysts warned on X that a BoJ rate hike could trigger Bitcoin volatility, citing past sell-offs of between 27% to 30%.
• According to on-chain analytics firm CheckOnChain, there are about $100 billion in unrealized losses and a hashrate rollover showing that miners and liquidity are under pressure.
• Decentralized finance analyst Hanzo said that risks for a downward trend are rising for Bitcoin due to the yen carrying trade and negative sentiment.

Bitcoin (BTC) market watchers on Monday were keeping a close eye on the Bank of Japan's policy meeting on December 19. 

According to a Nikkei report, Japan’s central bank is poised to hike rates for the first time in 11 months and could set a level not seen in 30 years. Traders on X said that such a rate hike could cause crypto markets to become volatile again.

BoJ Rate Hike Risks Triggering Yen Carry-Trade Unwind

Several macro-focused analysts on X pointed to a historical pattern of sharp Bitcoin sell-offs following previous Bank of Japan tightening measures. 

According to Quinten François, Bitcoin fell approximately 27% after the March 2024 hike, 30% after the July 2024 increase, and another 30% after the January 2025 hike. With the BoJ expected to raise rates by 25 basis points again, from 0.5% to 0.75%, François said it could force liquidations, and Bitcoin could be “dumped”.

Bitcoin was trading near $89,800, up only 0.11% over the past day. On Stocktwits, retail sentiment remained in “bearish” territory, with ‘low’ levels of chatter over the past 24 hours.

On-Chain Stress Builds As Bitcoin Faces Macro And Liquidity

According to on-chain analytics firm CheckOnChain, Bitcoin market stress has peaked since the 2022 bear market. The firm estimates that approximately $100 billion in unrealized losses are currently sitting across the network, putting pressure on holders who bought at recent highs.

CheckOnChain also detected a rollover in Bitcoin's hashrate, which has previously coincided with periods of miner stress and tighter liquidity conditions. 

Decentralized finance analyst Hanzo warned on X that the crypto market may be underestimating the decision's potential impact. He said that Japan's status as the largest foreign holder of US Treasuries (over $1.1 trillion) means that changes in BoJ policy can affect the availability of dollars around the world, treasury yields, and risky assets like Bitcoin.

Analysts think that the unwinding of the yen carry trade is a key way for this to happen. For years, investors took out loans in yen at low interest rates to buy assets that paid higher returns, like cryptocurrencies. When Japanese interest rates rise, those positions can quickly unwind, leading to forced liquidations and deleveraging across all markets.

Some analysts, like Peter Brandt, also pointed out that Bitcoin is already trading below recent highs, and could go down as low as $25,000 range.

Read also: ‘Solana Is Bitcoin 3.0’ – CIO Of Europe’s Oldest Crypto Fund Calls BTC ‘Unusable’ In Comparison To SOL

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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