BOJ Increases Interest Rates to 0.75%, While Bitcoin Remains Steady—A Sign of Caution or a Chance to Invest?

On December 19, the Bank of Japan (BOJ) raised its policy interest rate by 25 basis points, bringing it to 0.75%. This change marks the highest interest rate level in nearly three decades, indicating Japan's steady move away from ultra-easy monetary policies.

Key Takeaways

The BOJ raised interest rates to 0.75% on December 19, moving away from ultra-easy monetary policy.
Bitcoin's price increased slightly, indicating market readiness for the change.
Historical patterns suggest that previous hikes have led to Bitcoin sell-offs, but this time, traders appear unfazed.
The focus is now on future monetary policy guidance from the BOJ, particularly hints of continued rate hikes.
Bitcoin’s stability may not apply to altcoins, which are more sensitive to liquidity changes.

Despite this significant change and concerns regarding a global liquidity crunch, Bitcoin remained relatively stable, experiencing a modest increase of just under 1% and hovering around the $87,000 mark.

BOJ Raises Interest Rates Again—Why is Bitcoin Holding Steady?

The limited reaction from Bitcoin contrasts sharply with historical trends. In the past, periods of tightening by the BOJ have frequently led to significant sell-offs in crypto markets. These sell-offs often correspond with the unwinding of yen carry trades and tightening global liquidity.

The BOJ: A Major Challenge for Bitcoin

Japan is the largest holder of U.S. debt. Historically, each interest rate hike from the BOJ has resulted in declines in Bitcoin's value:

March 2024: -23%
July 2024: -30%
January 2025: -31%

With the next hike on December 19, market observers are on alert for potential downturns.

This time, however, traders seemed undeterred, implying that they had anticipated this change well in advance. The decision to raise interest rates was largely expected among market participants.

BOJ Interest Rate Probabilities. Source: Polymarket

Japan's decision to raise interest rates signifies a notable departure from decades of near-zero rates that rendered the yen a fundamental part of global funding markets. The low cost of borrowing in yen fueled leverage across various asset classes including stocks, bonds, and cryptocurrencies.

As Japanese yields rise and converge with global rates, these previously attractive trades may lose appeal, compelling investors to adjust their risk exposure. Nonetheless, Bitcoin's muted reaction indicates that the market was ready for this announcement.

Bitcoin (BTC) Price Performance. Source: BeInCrypto

Analysts suggest that the critical aspect of this situation isn’t merely the hike itself, but what might follow. As analyst Marty Party pointed out, “Markets are factoring in a likely 25 basis point hike, which signifies the highest policy rate in Japan in about 30 years. Although the hike was widely expected, the main focus is on Governor Ueda’s future guidance—hints of further increases could amplify market responses.”

This upcoming guidance is crucial. The BOJ has indicated that they may raise rates further, potentially reaching 1% or more by late 2026, depending on wage growth and ongoing inflation rates.

BOJ policy rate climbing from near 0% to 0.75% in December 2025, ending decades of ultra-easy policy. Source: Wise Advice via X

Such an outlook could maintain pressure on riskier assets, even if the immediate reaction does not lead to increased volatility.

Bitcoin Remains Strong as Altcoins Encounter a Liquidity Crunch

Analysts view Bitcoin's resilience as a potentially positive indicator. Blueblock highlighted historical trends, observing that the current situation is diverging from past patterns.

“The BOJ just raised rates to 0.75%, effectively concluding decades of loose policy and reducing the yield gap with global markets. Historically, each tightening has led to Bitcoin drops of 20-30% due to the unwinding of yen carry trades and liquidity constraints. Yet, since the hike is already accounted for and BTC is maintaining a range of $85,000–$87,000, this could represent an opportunity for buyers,” the analyst stated.

However, not all areas of the cryptocurrency market are expected to perform equally well. Altcoins, which usually react more sensitively to changes in liquidity, may face challenges if the BOJ continues tightening.

The outlook of sustained high rates through 2026 suggests a longer-term caution rather than a short-term adjustment.

BOJ’s December 2025 policy decision raised rates to 0.75% with guidance for further tightening. Source: Money Ape on X

“BOJ indicates it is prepared to raise rates further, possibly up to 1% or more by late 2026, depending on wage increases and persistent inflation. ALTCOINS FACE A TOUGH ROAD AHEAD,” noted Money Ape.

Bitcoin's stability reflects a market that had sufficient time to brace for the BOJ's decision. Whether this steadfastness continues will depend not only on the recent rate hike but also on how aggressively Japan pursues its tightening trajectory. Additionally, it will rely on how global liquidity adjusts to the gradual withdrawal of one of its longstanding monetary supports.