Bitcoin's depreciation risk intensifies amid Bank of Japan intervention risks

The Bank of Japan's near-tightening policy coincides with liquidation of yen carry trades in the cryptocurrency market, which have historically led to Bitcoin declines of 25% to 30%. The first small rate hike of 20 basis points on March 19, 2024, raising the Bank of Japan's interest rate from -0.1% to 0.1%, coincided with an intraday loss of 8%, which was quickly recovered. However, the 15-basis-point increase to around 0.25% on July 31, 2024, was accompanied by a 25% drop in Bitcoin within a week.

Meanwhile, the two subsequent rate hikes of 25 basis points each led to more controlled liquidation of yen carry trades. The increase to 0.50% on January 24 caused a 30% decline between late January 2025 and early April 2025, while the jump to 0.75% on December 18, 2025, indicated a potential drop to $60,000 in early 2026.

As of writing, Bitcoin is trading at around $59,000 USD, having declined by approximately 10% after the latest 25-basis-point rate hike on June 16, bringing it to 1%. Based on previous rate increases and the likelihood of Bank of Japan intervention, a conservative drop of around 25% could target the August 2024 low of roughly $49,000 USD.
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