The Bank of Japan is preparing to raise interest rates at its December policy meeting, a move that will lift the country’s benchmark interest rate to the highest level since 1995 and potentially reverberate through global risk markets, including crypto.
People with knowledge of the matter told Bloomberg that policymakers are leaning toward a 25 basis point hike to 0.75% at the Dec. 19 meeting, contingent on no major shock to global markets or Japan’s domestic outlook.
The yen strengthened after the report, rising from just above 155 to around 154.56 per dollar on Friday.
Such implications run through the yen-financed carry trade, one of the financial world’s oldest macro linkages. Hedge funds and proprietary trading desks have historically borrowed the yen at ultra-low interest rates to fund leveraged positions in higher-beta assets — a structure that persisted through nearly three decades of near-zero BOJ policy.
A shift towards higher Japanese rates reduces the attractiveness of this trade and may force position adjustments in markets where leverage and liquidity are most sensitive, including bitcoin.
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin bounce back from November lows.
BTC fell towards $86,000 earlier this week before turning above $93,000 alongside US stocks, and remains heavily influenced by global interest rate expectations after a month of macro-driven volatility.
Governor Kazuo Ueda signaled Monday that the board would make an “appropriate decision” on rates, language similar to remarks delivered ahead of previous increases. Market prices now imply an almost 90% probability of a December move. Prime Minister Sanae Takaichi’s key ministers are not expected to oppose the move.
BOJ officials are also likely to indicate readiness for further tightening if their outlook materializes, although they remain cautious about committing to a path.
For bitcoin traders, the risk is less about Japan’s terminal interest rate and more about directional ruptures from a decades-long source of global liquidity.
If yen funding costs continue to rise, leveraged macro funds may trim exposure to BTC and other high-volatility assets. But a controlled, gradual BOJ tightening, without sharp equity withdrawals, may have limited effect in the near term, especially with rising US rate cut odds.
