Bitcoin Faces Pressure as BOJ Rate Hike Looms

Bitcoin is once again under pressure as global markets increasingly price in a near-certain Bank of Japan (BOJ) interest rate hike at its upcoming December 18–19 policy meeting. Traders now expect the BOJ to raise rates by 25 basis points to 0.75%, a move that would mark Japan’s highest policy rate in nearly 30 years and tighten global liquidity conditions. This shift in monetary policy is weighing on risk assets, including cryptocurrencies, as investors brace for reduced access to cheap capital.

Market expectations around the BOJ decision have surged sharply. According to a Bloomberg chart shared by analyst Ted Pillows, the probability of a 25-basis-point rate hike has climbed above 90%, following hawkish comments from BOJ policymakers reported by Reuters. Prediction markets reinforce this outlook, with Polymarket currently assigning up to a 98% chance of a December rate increase, while expectations for larger hikes remain minimal.

Historically, Bitcoin has struggled during periods of BOJ tightening. Past rate hikes have coincided with Bitcoin drawdowns of 20% to 25%, largely due to the unwinding of the yen carry trade. When Japanese rates rise, borrowing yen becomes more expensive, prompting investors to reduce exposure to higher-risk assets such as cryptocurrencies. Some analysts now warn that Bitcoin could revisit the $70,000 range if selling pressure accelerates.

Despite short-term bearish sentiment, long-term investors remain active. Strategy founder Michael Saylor has indicated plans to continue accumulating Bitcoin, even as market fear rises. However, on-chain data suggests increasing downside hedging, with reports of a large whale opening an $89 million Bitcoin short using leverage, adding to near-term volatility concerns.

Prediction markets are also signaling caution. Kalshi data shows a growing probability that Bitcoin could fall below $80,000 before year-end. At the time of writing, Bitcoin trades around $88,800, with price action heavily influenced by macroeconomic developments. While some strategists, including Tom Lee, anticipate a recovery and potential new all-time highs in early 2026, the BOJ’s decision is likely to set the tone for Bitcoin’s price trend through the end of the year.