From early 2024 to early 2025, the Bank of Japan raised interest rates three times, each time accompanied by a significant drop in Bitcoin. Specifically:

In March, when the first negative interest rate was exited, Bitcoin dropped by 23%. In July, when rates were raised to 0.25%, the decline expanded to 26%. By January of this year, when rates were increased to 0.5%, Bitcoin even fell by 31%.

The underlying logic is straightforward—the collective unwinding of yen carry trades. Previously, large amounts of funds borrowed low-interest yen to purchase cryptocurrencies. Once rates are raised, these positions must be collectively liquidated, and the pump-out effect inevitably causes a sell-off.

However, this round seems to be somewhat different. First, the pessimistic expectations have already been priced in—Bitcoin dropping from 120,000 to 90,000 reflects this anticipatory reaction. Second, if the central bank's meeting on the 19th raises rates but does not signal a hawkish stance, the decline may not exceed 30%, and could instead stabilize after an initial drop.

The key scenarios to watch next are: a 25 basis point rate hike combined with a neutral stance, which could cause Bitcoin to sharply fall to 72,000-75,000; if it can hold, the decline might stop there. If the rate hike is accompanied by hawkish signals indicating further increases in 2026, Bitcoin could break below 70,000, even reaching 65,000. The last scenario, if there is an unexpected pause in rate hikes, would be a violent rebound back to 95,000-100,000.