BOJ Signals Hawkish, Crypto Markets Risk Volatility in 2 Days!

Jakarta, Pintu News – The global crypto market is bracing for high volatility as the Bank of Japan (BOJ) signals an interest rate hike. This policy is considered to have the potential to put great pressure on risky assets, including cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP).

Japan, as one of the world’s largest economies, has a significant influence on global liquidity flows. If an interest rate hike does occur, the crypto market is expected to come under pressure in the near future.

Bank of Japan prepares to raise interest rates

The Bank of Japan has maintained ultra-low interest rates for decades to boost economic growth. The cheap money policy made Japan a global funding source for risky instruments. However, rising inflation and a weakening yen are forcing the BOJ to consider a change in the direction of monetary policy. An interest rate hike is now an increasingly realistic option.

Economists expect the BOJ to raise interest rates by 0.25% from 0.5% to 0.75%. If realized, the rate will be the highest in decades. Although seemingly small, this change marks a major shift in Japan’s monetary policy. The impact could potentially extend to global financial markets, including crypto and cryptocurrencies.

Also read: BTC, ETH, and Altcoins Plunge, Why did the Crypto Market Crash Today (12/18)?

Impact of Monetary Tightening on Crypto Market

The crypto market is highly sensitive to global liquidity. When interest rates are low, cheap funds flow into risky assets like cryptocurrencies. Conversely, when central banks tighten policy, borrowing costs increase and liquidity tends to shrink. This often triggers sell-offs in speculative markets.

History shows a similar pattern. In 2022, aggressive interest rate hikes by the US Federal Reserve caused the price of Bitcoin to plummet from over USD 60,000 to below USD 20,000. Analysts think a similar scenario could happen if the BOJ takes the same step. Although the scale is different, the risk-off sentiment could spread quickly to the global crypto market.

The Role of the Yen and Global Carry Trade

The BOJ rate hike has the potential to strengthen the value of the Japanese yen. The yen has often been used in carry trade strategies, where investors borrow yen at low interest rates to invest in higher-yielding assets. Crypto assets are one of the destinations of such fund flows. If the yen strengthens, the carry trade strategy becomes less attractive.

Also read: XRP is predicted to surpass ETH in 2026, YoungHoon Kim shares his opinion!

The closing of carry trade positions could trigger a reverse flow of funds to Japan. This could potentially create additional selling pressure in the crypto market. Analysts think this impact is not just limited to the Japanese market. As the world’s third largest economy, Japan’s monetary policy could create a domino effect globally.

Current Crypto Market Conditions

As of December 17, the crypto market is starting to show signs of pressure. The price of Bitcoin (BTC) is hovering around USD 86,589, down more than 1% in 24 hours. Ethereum (ETH) was trading at USD 2,834, recording a decline of more than 4%. Meanwhile, Ripple (XRP) was at USD 1.86 or around Rp31,070, down almost 4%.

The total market capitalization of cryptocurrencies is recorded at around USD 2.92 trillion or equivalent to IDR 48,790 trillion. This price drop reflects the increasing caution of investors ahead of the BOJ decision. The market seems to start anticipating a liquidity tightening scenario. Volatility is expected to remain high in the short term.

Conclusion

The planned interest rate hike by the Bank of Japan is a new risk factor for the crypto market. Tightening monetary policy has the potential to reduce global liquidity and pressure risky assets, including cryptocurrencies. Although there is no final decision yet, the signal from the BOJ is enough to trigger investor caution. In the short term, crypto market movements are likely to be heavily influenced by developments in Japan’s monetary policy.

FAQ

What does the BOJ rate hike signal mean?

The signal refers to indications that the Bank of Japan will raise its benchmark interest rate from its long-held low level.

Why does BOJ policy impact the crypto market?

Because changes in interest rates affect global liquidity, which plays an important role in the movement of risky assets like crypto.

Will the BOJ rate hike definitely make crypto prices fall?

Not always, but tightening policies usually increase volatility and selling pressure in the short term.

What does the Japanese yen have to do with the crypto market?

The yen is often used in carry trade strategies for risky investments, including crypto, so changes in its value can affect fund flows.

What do crypto investors need to pay attention to right now?

Global monetary policy developments, particularly the BOJ’s official decision, as well as liquidity conditions and market sentiment.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities have high risk and volatility, always do your own research and use cold cash before investing. All activities of buying and selling bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• Coinpedia. Japan Rate Hike Could Crash Bitcoin And Altcoins in the Next 48 Hours. Accessed December 18, 2025
• Featured Image: Generated by AI