- The Bank of Japan raised its key interest rate to 0.75%.
- Policy change affects JPY carry trades.
- Yen strength may reduce USD liquidity flows.
The Bank of Japan (BoJ) raised its key interest rate to 0.75% at their December 2025 meeting, signaling a shift in economic policy amid persistent negative real rates.
This rate hike, the highest since 1995, could strengthen the yen, impacting global cryptocurrency liquidity and yen-funded risk asset allocations, like BTC and ETH.
BoJ’s 0.75% Rate Marks Highest Since 1995
The Bank of Japan announced a 0.75% interest rate following a unanimous Policy Board decision, marking the highest level since 1995. Kazuo Ueda, the BoJ Governor, emphasized the need for further hikes if economic conditions align. Ueda remarked, “Expectations for continued wage growth amid a shrinking workforce are aligning for further hikes if met.” The decision reflects concerns over deeply negative real interest rates, even after the adjustment.
Market implications include the strengthening of the yen, impacting JPY carry trades. This shift could reduce liquidity flows into high-yield assets like BTC and ETH as capital returns to Japan. The hike follows Japan’s first policy shift from ultra-loose rates earlier this year, illustrating a departure from its deflation-fighting stance.
Market reactions suggest growing tensions on currency markets, with potential pressure on USD-denominated crypto assets. Although BoJ did not announce any direct measures affecting cryptocurrencies, the alignment with global tightening trends indirectly influences yen dynamics against major currencies.
Bitcoin Faces Turbulence Amid Global Monetary Shifts
Did you know? The Bank of Japan’s policy interest rate in 2025 has reached its highest point since 1995, aligning with global monetary policy shifts after decades of near-zero rates.
Bitcoin’s current price hovers at $87,795.72, with a market cap of $1.75 trillion, dominating 58.90% of the market. In the last 60 days, BTC has seen a -20.34% change. This data, from CoinMarketCap, highlights a potential impact from monetary policy shifts, impacting global liquidity.
Insights from Coincu suggest potential outcomes include tightening regulations and economic adjustments in response to Japan’s rate changes. Historical trends indicate shifts in global monetary policies could further influence cryptocurrency markets, affecting volatility and investment flows.
| DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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