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Market Analysis
Why the Bank of Japan Rate Decision Could Trigger Bitcoin’s Fifth Crash
Bank of Japan Rate Hike and Bitcoin Price Impact
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The Bank of Japan’s two-day policy meeting ending June 16, 2026, has an 80–97% market-implied probability of a 25-basis-point BOJ rate hike, raising Japan’s benchmark rate from 0.75% to 1.0%, the highest since 1995.
Historically, every BOJ rate hike since March 2024 has led to Bitcoin price drawdowns of 18% to 32%, with an average of 27%.
Currently, BTC is down over 50% from its October 2025 highs, and yen short positions are at a nine-year high, with $1.5Bn in liquidations on the long side in a 24-hour period earlier this month.
BOJ Governor Kazuo Ueda hinted at this hike in a June 3 speech, citing energy price pressures. A Reuters poll showed 65% of economists expected a hike, which has since strengthened to around 98% odds, with three BOJ board members advocating for it at the April meeting.
The Yen Carry Trade Transmission Channel: How a BOJ Rate Decision Reaches Bitcoin’s Order Book
The connection between BOJ rate decisions and BTC price action involves the yen carry trade. Investors have been borrowing in yen at low rates, converting the proceeds to USD or stablecoins, and investing in higher-yield assets such as Bitcoin.
This trade is profitable as long as interest rate differentials and a weak yen persist. When the BOJ raises rates and the yen strengthens, conditions worsen, leading to forced selling of risk assets, including Bitcoin, which is liquidated quickly due to its 24/7 trading.
In August 2024, a surprise BOJ policy change triggered a rapid unwind of this carry trade, impacting Asian equities and global markets, with Bitcoin seeing significant sell-offs.
With net speculative short positions on the yen at a nine-year high, the potential for forced yen buying and risk-asset selling is greater than in previous episodes.
Additionally, a stronger yen and rising domestic yields divert local capital towards Japanese bonds and cash, further reducing demand for crypto.
The Four Prior Rate Hikes: What Each Rate Decision Has Done to Bitcoin Since March 2024
The empirical record is clear: following the Bank of Japan’s (BOJ) first interest rate hike in 17 years in March 2024, Bitcoin (BTC) declined 18%. Subsequent BOJ rate hikes in July 2024, January 2025, and December 2025 saw drawdowns of 30%, 31%, and 32%, respectively.
At the same time, BTC fell below $60,000 for the first time since 2024. The average decline across these episodes is around 27%, highlighting a consistent pattern: no post-hike BTC rallies and an increasing drawdown magnitude with each hike.
As of June 16, the market is under pressure, with BTC more than 50% below its October 2025 highs. This sets a precarious stage for any future rate increase, as there is no prior bull trend to provide support, making the market vulnerable to a carry unwind at critical support levels.
The author does not hold or have a position in any securities discussed in the article.
Tim Baker
Tim Baker is a Senior Market Analyst at Tokenist with over a decade of experience educating readers about traditional finance, crypto and DeFi. A former equity researcher turned on-chain analyst, Tim specializes in regulatory framework shifts and institutional DeFi adoption. His work focuses on distilling complex liquidity cycles and the macro environment into actionable intelligence for the modern DIY investor.
