Bitcoin could come under renewed selling pressure as the Bank of Japan (BoJ) prepares for a potential interest rate hike, raising concerns about a price decline below the $70,000 level. Analysts warn that tighter monetary policy in Japan may reduce global liquidity, historically a negative catalyst for Bitcoin and other risk assets.
The Bank of Japan is approaching a critical policy decision that could significantly impact the Bitcoin market. A widely anticipated interest rate increase on December 19 may push Bitcoin below the $70,000 threshold, according to several macro-focused analysts. Historical data indicates that previous BoJ rate hikes since 2024 have coincided with substantial Bitcoin corrections of more than 20%.
Market analyst AndrewBTC highlights a consistent pattern, pointing to Bitcoin declines of approximately 23% in March 2024, 26% in July 2024, and 31% in January 2025 following earlier BoJ tightening measures. These historical correlations suggest that Bitcoin remains highly sensitive to shifts in global monetary conditions.
Japan plays a crucial role in global liquidity dynamics. When the BoJ raises interest rates, the Japanese yen typically strengthens, making borrowing cheaper capital less attractive and increasing the cost of investing in higher-risk assets. As a result, traders often unwind so-called “yen carry trades,” leading to reduced liquidity across global financial markets. In periods of liquidity contraction, Bitcoin tends to face downside pressure as investors reduce leverage and scale back exposure to risk-on assets.
Technical analysis further supports a bearish outlook. On the daily chart, Bitcoin is showing signs of a classic bear flag formation following a sharp decline from the $105,000–$110,000 range in November. This pattern suggests the potential continuation of the downward trend. A confirmed breakdown below the lower trendline could trigger a further move toward the $70,000–$72,500 support zone.
Other analysts, including EX and James Check, share similar concerns and see elevated downside risk in the current market environment. A BoJ interest rate hike could act as a catalyst for another Bitcoin correction, particularly if global liquidity continues to tighten. Investors are advised to closely monitor macroeconomic developments and adjust their strategies accordingly to remain prepared for increased market volatility.
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