Bitcoin came under renewed pressure over the weekend as markets increasingly expect the Bank of Japan (BoJ) to raise interest rates at its upcoming policy meeting next week. Traders now widely anticipate a rate hike that would bring Japan’s benchmark interest rate to 0.75%, a move that could tighten global liquidity conditions and weigh on risk assets, including cryptocurrencies.
The last 3 times Japan hiked rates, $BTC dumped 20%-30%.
BOJ is expected to do a rate hike again on 19th December.
Will this time be different? pic.twitter.com/2Glf0U9jQd
— Ted (@TedPillows) December 14, 2025
Market attention is firmly focused on the December policy meeting, as growing whale short positions add further uncertainty to Bitcoin’s near-term outlook. While short-term sentiment remains cautious, some analysts believe Bitcoin could rebound once macroeconomic uncertainty clears.
Will a BoJ Rate Hike Trigger a Bitcoin Pullback?
Renowned Bloomberg analyst Ted Pillows recently shared a chart on X indicating that the probability of a 25-basis-point rate hike at the BoJ’s December 18–19 meeting exceeds 90%. Following comments from Japanese policymakers, expectations surged further. Reuters reported that the likelihood of a 25-basis-point hike next week stands at 91.4%.
Another analyst suggested Bitcoin could trade near the USD 70,000 level if historical patterns repeat. In previous tightening cycles, BoJ rate hikes have coincided with 20%–25% declines in Bitcoin, largely due to the unwinding of yen carry trades.
When Japan raises rates, borrowing costs in yen rise, prompting investors to reduce exposure to higher-risk assets such as cryptocurrencies. However, long-term holders have continued to accumulate Bitcoin despite volatility. Michael Saylor, for example, has signaled continued strategic Bitcoin purchases even amid extreme market fear.
Market pricing already reflects these expectations. On Polymarket, the probability of a 25-basis-point BoJ rate hike in December has climbed to 98%, while expectations for a larger increase remain relatively low.
Could Bitcoin Fall Below USD 80,000 This Year?
A move to 0.75% would push Japan’s policy rate to its highest level in 30 years, bringing it closer to estimates of a neutral rate. Some analysts warn this decisive shift could accelerate downside momentum in global risk markets.
That said, several strategists argue that once volatility subsides, Bitcoin could stage a recovery. Tom Lee has projected that Bitcoin may reach a new all-time high in early 2025.
On-chain data shows rising bearish sentiment among large traders. Ted Pillows noted that a major whale recently opened a USD 89 million Bitcoin short position with 3x leverage, a trader who has reportedly earned over USD 23 million in profits over the past two months.
The probability of the BOJ doing a 25 bps rate hike next week is 91.4%
It seems like a rate hike is imminent now. pic.twitter.com/elfZ5Kiu4l
— Ted (@TedPillows) December 14, 2025
Derivatives markets also suggest traders are increasingly hedging against deeper declines. Kalshi contracts currently imply a 28% probability that Bitcoin falls below USD 80,000 before year-end. According to CoinMarketCap, Bitcoin is currently trading at approximately USD 88,805.
With crypto markets highly sensitive to macroeconomic developments, investor sentiment remains fragile. The outcome of the Bank of Japan’s upcoming meeting is widely expected to play a decisive role in shaping Bitcoin’s price direction through the end of the year.
