Bank of Japan Increases Interest Rates to 0.75%, Impacting Bitcoin and Global Markets

Japan’s Bank of Japan raised rates to ~0.75%, shaking global markets. Despite negative real rates, macro traders expect this change to boost Bitcoin, which rebounded ~2.5% to ~$88,000 post-announcement.

Kazuo Ueda, Governor of the Bank of Japan, announced a rate hike to 0.75%, the highest in 30 years, affecting Bitcoin and global markets on December 20 in Japan.

The rate increase signals the end of Japan’s “free money” era, affecting yen speculation and Bitcoin positioning as markets react to Japan’s monetary policy shift.

The Bank of Japan raised its policy rate to around 0.75%, ending a long period of ultra‑low interest rates. Governor Kazuo Ueda framed this move as a normalization of policy, rather than aggressive tightening, despite maintaining negative real rates. This decision has significant implications for global markets, particularly the Bitcoin ecosystem. In response to the rate hike, Bitcoin’s price rebounded by approximately 2.5%, reaching around $88,000. Traders have revised their strategies, interpreting Japan’s decision as a move not intended to be a liquidity tightening shock.

Arthur Hayes, Co-founder & Former CEO, BitMEX – “Don’t fight the BOJ: negative real rates is the explicit policy. $JPY to 200, and $BTC to a milly.” source

Arthur Hayes, former CEO of BitMEX, argues that the negative real rates policy benefits Bitcoin. However, economist Fred Krueger suggests the impact may be overstated, considering Japan’s economic model encourages gradual adjustments. The BoJ’s decision ends the era of “zero-rate yen” funding, affecting yen carry trades. Despite Japan’s tighter nominal stance, many see ongoing accommodative conditions. Global liquidity dynamics, influenced by Japan’s and the Fed’s diverse policies, play a crucial role in market sentiments. Both historical precedents and recent market actions highlight potential reductions in Bitcoin’s volatility due to monetary policy adjustments.

Bitcoin’s recent rebound reflects strategic shifts. Despite Japan’s rate hike history suggesting risks, the current macroeconomic environment, including U.S. policy shifts, could mitigate potential market instability. Historical data shows previous BoJ hikes in 2025 led to significant Bitcoin sell-offs. However, the current context of continued accommodative financial conditions underpins a narrative of medium-to-long-term support for cryptocurrency as a hedge against currency devaluation. Markets anticipate further rate adjustments, considering global economic trends and Japan’s distinctive financial strategies. Bitcoin‘s role as a hedge against inflation remains a topic of strategic importance within this evolving financial landscape.