Will Bitcoin's Price Move Up or Down Following the BoJ Rate Decision on December 19?

The Bitcoin market is in a state of anticipation this week as investors wait for the Bank of Japan (BoJ) to announce its interest rate decision on December 19. Currently, Bitcoin is trading at $87,700, which is approximately 7.47% lower than its highest value this month and about 30% below its all-time peak.

Key Takeaways

Bitcoin is currently priced at $87,700 amid speculation regarding the BoJ's upcoming interest rate decision.
The probability of a BoJ rate hike has surged to 98%, affecting Bitcoin and other asset prices.
A BoJ hike could prompt investors to abandon some riskier assets, but this potential outcome is largely anticipated by the market.
Technical analysis indicates a bearish outlook for Bitcoin in the short term, with a possible retest of previous lows.

Bitcoin price

Rising Likelihood of a BoJ Interest Rate Hike

As the likelihood of an interest rate increase from the Bank of Japan increases, Bitcoin, along with altcoins and stock markets, has seen a decline in value. According to predictions from Polymarket, there is now a 98% chance of a rate hike, reflecting heightened investor caution.

Odds of BoJ interest rate hike | Source: Polymarket

A rate hike from the BoJ is significant, considering it is one of the largest central banks worldwide, holding more than $4.48 trillion in assets and being the largest owner of U.S. government bonds. The risk associated with a BoJ rate hike coinciding with the Federal Reserve lowering rates might lead investors to unwind carry trades—investments where they borrow in low-interest-rate areas to invest in assets offering higher returns.

Japan's long-standing low-interest-rate stance has made it a key player in facilitating carry trades. Consequently, as the interest rate gap between U.S. and Japanese assets narrows, investors might liquidate their riskier investments. Despite these concerns, the anticipated BoJ rate hike might not drive Bitcoin prices lower, as the likelihood of such a hike at 99% suggests that this outcome is already factored into market valuations. As a result, Bitcoin might see a rebound as investors choose to "buy the news" and adapt to the new economic landscape.

Technical Analysis of Bitcoin's Price

Bitcoin price
BTC price chart | Source: crypto.news

From a technical perspective, the daily chart indicates a bearish trend for Bitcoin in the near term. The cryptocurrency appears to be forming a bearish flag pattern, having completed the initial inverted flagpole formation and now entering the flag phase.

Bitcoin is currently positioned below both the Supertrend indicator and the 100-day Exponential Moving Average. It is also approaching the 78.6% Fibonacci Retracement level. Therefore, there is a plausible risk that Bitcoin could decline further, potentially revisiting its year-to-date low of $74,423, which is around 15% lower than its current price.

While the immediate outlook for Bitcoin leans bearish, there is a possibility for it to rebound and test the upper boundary of the flag pattern at $94,500 before resuming its downward trend.

In conclusion, as the market braces for the BoJ's decision, all eyes will remain on Bitcoin's movements amid the shifting economic landscape.