Japan’s Upcoming Interest Rate Increase May Shift Global Risk Appetite – Could Bitcoin Benefit?

Japan’s central bank is set to conduct its Monetary Policy Meeting (MPM) on December 18–19, 2025, with market participants speculating on a potential increase in the interest rate to 0.75% from the current 0.5%. This adjustment could alter the global risk landscape and have a substantial effect on the Bitcoin price prediction outlook.

Japan’s Rate Increase Poses Risks for Bitcoin

Experts perceive the anticipated rate increase as signaling the conclusion of the “Carry Trade” period.

Elevated rates enhance the attractiveness of yen-denominated assets, leading investors to withdraw funds from foreign investments such as cryptocurrencies.

This development strengthens the yen, escalates borrowing expenses globally, and suppresses Bitcoin speculation, which has historically resulted in price declines of 20-30%.

HOW WILL BITCOIN RESPOND TO JAPAN’s RATE INCREASE?
The Bank of Japan is anticipated to raise rates to 0.75%, a level not observed since 1995, and #Bitcoin is already reacting negatively.
WHY?
Because historical trends have not favored Bitcoin in this context…
During the last three BOJ rate hikes, BTC experienced drops exceeding 20%… pic.twitter.com/KaEsxZyHc8

— Coin Bureau (@coinbureau) December 15, 2025

Macro investor Afsheen Jafry pointed out that while the focus is often on Powell and the Fed, the BOJ actually influences a more fundamental aspect: global liquidity movements.

“When the BOJ tightens, capital returns to Japan. When they loosen, it flows out, and crypto is typically the first to benefit from that overflow,” she remarked.

She referenced July 2024 when the BOJ’s rate hike led to a significant selloff, driving Bitcoin from $73,000 to $53,000.

“That was not coincidental. It was a large-scale unwinding of the carry trade.”

The BOJ also possesses approximately ¥83 trillion ($534 billion) in ETFs accumulated since 2010, which constitutes 7-8% of Japan’s ETF market.

Reports suggest that officials intend to begin gradual sales of these ETFs starting in January 2026.

Such sales would reverse years of liquidity injections, potentially exerting pressure on Japanese equities and diminishing global risk appetite.

Bitcoin Price Prediction: Maintaining $80K Support Is Vital for Price Recovery

Bitcoin is maintaining its position above the $80,000 mark following a sharp decline in November, indicating that buyers are defending this crucial support level that has persisted since late 2024.

The recent movement towards the upper $80,000s suggests early signs of recovery, yet BTC remains constrained below the significant resistance zone of $100,000 to $109,000.

Breaking through this range could shift momentum and confirm a genuine reversal. Otherwise, this rebound may diminish.

Source: TradingView

The RSI has risen from oversold conditions into the mid-40s, indicating that selling pressure is easing, although upward momentum is not yet compelling.

If Bitcoin continues to hold above $80,000, a retest of $100,000 is probable, with $109,000 as the subsequent target. Conversely, a breakdown could lead BTC to slide towards the $62,000 to $71,000 demand zone.

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