Japan to Raise Interest Rates for First Time in 11 Months: Here’s How Bitcoin Reacted the Last Time

Economists now agree that the Bank of Japan could raise interest rates this month for the first time in nearly a year, and Bitcoin is bracing for the impact. 

Major financial outlets report that the BOJ plans to lift its benchmark rate by 25 basis points to 0.75% at its December 18-19 meeting.

This move would restart the tightening cycle the bank paused in January 2025 after it pushed rates to 0.50%. Notably, policymakers want to address inflation that continues to sit above the 2% target. In addition to this, the weakening yen has kept import costs high.

Economists Confident of a BOJ Rate Hike

A Reuters poll conducted from Dec. 2 to 9 shows how strongly expectations have changed. Out of 70 economists, 63, or about 90%, expect the BOJ to raise rates to 0.75% this month, up sharply from 53% in the previous survey. In the same poll, 58 respondents say rates will reach at least 1.00% by September 2026. 

Meanwhile, a separate Bloomberg survey published on Dec. 11 shows even stronger confidence, as all 50 economists polled expect the December hike. Most of them, about 81%, point to the yen’s 10-month low against the dollar as the main force behind rising prices.

For the uninitiated, Japan’s currency slump continues to drive cost-push inflation. As of November 2025, inflation remained above the 2% target for forty-three straight months. Sources familiar with the BOJ’s plans said on Dec. 12 that the bank will confirm its intention to continue raising rates after December, while adjusting its pace based on incoming economic data. 

Tokai Tokyo Securities strategist Kazuhiko Sano told Bloomberg that the December hike looks certain. Notably, markets already reflect this view and now focus on where rates eventually settle, likely between 1.00% and 1.25%.

How Did Bitcoin React the Last Time?

Meanwhile, Bitcoin analysts are bracing for a potential impact, especially considering how the premier crypto asset reacted the last time. Specifically, on Jan. 23, when the bank last raised rates, Bitcoin traded around $105,000 after climbing from $89,000 just ten days earlier. 

The hike quickly changed market sentiment, as Bitcoin fell to $95,000 by Feb. 6, found temporary support, then drifted lower for the next several weeks. Sellers returned in late February, and despite a few rebounds, Bitcoin kept slipping until it reached $74,434 on April 7, 2025. 

For perspective, the drop from $105,000 to $74,434 marked a 29% decline in under four months. With Bitcoin now near $92,426, a similar move would drag the price toward $65,622, a level last seen in October 2024 before the rally that followed Donald Trump’s election win.

Bitcoin Analysts Expect Impact

Analysts have continued to warn that another BOJ hike could trigger similar pressure. Earlier this month, market watcher BitBull said the BOJ’s rate moves often align with major Bitcoin turning points. 

He said the March 2024 hike marked a local top, the July 2024 hike drove Bitcoin below $50,000, and the January 2025 increase again aligned with a top. Now, he expects a decline similar to July 2024, possibly sending Bitcoin briefly below $80,000 before a rebound toward $100,000.

Crypto Rover also warned that a BOJ hike combined with a Federal Reserve rate cut could narrow the U.S.-Japan rate gap. He said a stronger yen and weaker dollar make yen-funded positions more expensive, which forces investors to unwind and sell risk assets.

IF THE FED CUTS AND THE BOJ HIKES IN DECEMBER, THE RATE GAP BETWEEN THE U.S. AND JAPAN COLLAPSES.

A stronger yen and a weaker dollar suddenly make years of cheap yen-funded bets expensive to maintain.

That forces investors to unwind, selling assets to repay their yen positions.… pic.twitter.com/sKA4tiA6wZ

— Crypto Rover (@cryptorover) December 3, 2025

According to him, the last time the yen carry trade unwound, Bitcoin hit a major low as global liquidity tightened. Interestingly, the Fed already cut interest rates by 25-bps to a range of 3.50% to 3.75%.