The Bank of Japan is preparing to raise interest rates at its December policy meeting, a shift that would lift the country’s benchmark interest rate to its highest level since 1995 and could have implications for global risk markets including cryptocurrencies.
Policymakers are leaning towards a 25 basis point hike to 0.75% at the December 19 meeting, provided there is no major shock to global markets or Japan’s domestic outlook, people familiar with the matter told Bloomberg.
The yen strengthened following the report, rising from just above 155 to around 154.56 on Friday.
This influence runs through the yen-funded carry trade, one of the oldest macro linkages in finance. Hedge funds and proprietary trading desks have historically borrowed yen at ultra-low interest rates to finance leveraged positions in high-beta assets — a structure that has persisted through nearly three decades of near-zero BOJ policy.
Rising interest rates in Japan would make the trade less attractive and could force positioning in the most leveraged and liquidity-sensitive markets, including Bitcoin.
A stronger yen typically accompanies de-risking of macro portfolios, a dynamic that could tighten liquidity conditions that have recently helped Bitcoin rebound from its November lows.
Bitcoin prices fell to $86,000 earlier this week before recovering to over $93,000 along with U.S. stocks, and after a month of macro volatility, Bitcoin remains heavily influenced by global interest rate expectations.
Governor Kazuo Ueda said on Monday that the board would make an “appropriate decision” on interest rates, using similar language to previous comments before raising interest rates. The market is currently pricing in an almost 90% chance of a move in December. Prime minister Sanae Takaichi’s key ministers are not expected to object to the shift.
Bank of Japan officials are also likely to signal they are ready to tighten monetary policy further if their outlook materializes, but they remain cautious about what policy to pursue.
For Bitcoin traders, the risk lies not in Japan’s terminal rates but in a directional break with a decades-long source of global liquidity.
If yen funding costs continue to rise, leveraged macro funds may cut exposure to Bitcoin and other high-volatility assets. But the Bank of Japan’s controlled and gradual tightening policy may have limited short-term impact if the stock market does not fall sharply, especially as the possibility of U.S. interest rate cuts rises.