One year after its peak at $103,900, bitcoin faces a new challenge: the imminent rise of Japanese rates. While markets fear an unwind of the yen carry trade, the real risks for BTC lie elsewhere. Analysis of a tense December, between Japanese anticipation and American relief.
Key Takeaways
- •The Bank of Japan (BOJ) is expected to raise its rates in December 2025, but this already integrated decision limits the risks of a sudden shock on bitcoin.
- •Despite Japanese pressure, bitcoin benefits from the decline in US rates, which mitigates the impact of a possible unwind of the yen carry trade.
- •The primary threats to bitcoin do not originate from Japan but from a potential Federal Reserve reversal, regulatory changes, or a slowdown in institutional adoption.
BOJ: Rate Hike Expected Imminently
The Bank of Japan (BOJ) is preparing to raise its rates on December 18 and 19, 2025, a decision that has been widely anticipated by the market. Current expectations are for a 0.25 point increase, which would bring the benchmark rate to 0.75%, a level not seen since 1995. Japanese 10-year bond yields are currently trading around 1.95%, exceeding the projected official rate by more than 100 basis points. Market data indicates a 76% probability of this rate hike occurring.
However, in contrast to the market reaction in August 2025, when an unexpected hike caused significant panic, investors appear to be prepared for this upcoming monetary adjustment. The yen, despite a slight appreciation of +0.03% on December 9, continues to face structural downward pressure. Analysts suggest that this monetary normalization is not a surprise, thus limiting the potential for market shock. Speculators have reduced their short positions on the yen since February, which helps to mitigate the risk of a sudden unwind.
Bitcoin's Position: Japanese Rates Versus US Rate Cuts
Bitcoin, which is often influenced by global liquidity, is currently subject to two opposing forces. On one hand, the anticipated increase in Japanese interest rates could diminish the attractiveness of the yen as a low-cost financing currency, potentially impacting risk assets. On the other hand, the recent rate cut by the Federal Reserve is injecting liquidity into the financial system, thereby easing overall market pressure. In mid-December, bitcoin is trading around $87,500, a significant decrease from its peak of $103,900 recorded a year prior.
The current economic dynamic differs from previous periods; in 2024, high US interest rates exerted pressure on markets, whereas in 2025, the decline in US rates is providing a supportive environment. Bitcoin ETFs, despite experiencing record outflows in November, are operating within a more favorable economic landscape. While a potential unwind of the yen carry trade might lead to temporary selling pressure on bitcoin, its overall impact is expected to be limited by the prevailing US economic conditions. The true test for bitcoin will be its ability to leverage US liquidity to offset the effects of Japanese monetary tightening. Ignacio Aguirre, CMO at Bitget, commented on this dynamic:
The Japanese rate hike contrasts with the expected Fed cuts in 2026, creating increased volatility that often opens attractive accumulation windows for long-term investors.
The True Risks for Bitcoin Are Not From Japan
While the yen carry trade is drawing considerable attention, the most significant threats to bitcoin's stability originate from other factors. The first major risk is an unexpected reversal in the Federal Reserve's monetary policy in 2026, which would challenge the current scenario of anticipated rate cuts. A second concern involves regulatory developments, as there is increasing scrutiny on Bitcoin ETFs and stablecoins.
Furthermore, institutional adoption, often cited as a primary driver for bitcoin's growth, could potentially become a limiting factor. Additionally, competition from traditional assets, such as gold or technology stocks, may divert capital away from bitcoin if bond yields become more attractive. In the short term, bitcoin is projected to trade within a range of $85,000 to $95,000. In the longer term, bitcoin's trajectory will be more dependent on the United States' capacity to sustain an accommodative financial environment rather than on developments in Japan.
As 2026 approaches, market participants are closely observing the Bank of Japan. Bitcoin has demonstrated its resilience to monetary policy shifts in the past. This time, its capacity for adaptation and innovation will be crucial in defining its future role within the global financial system. The question remains whether the upcoming announcements from the BOJ will prove beneficial or detrimental to BTC.