Madman says…

The Bank of Japan will decide this week whether to raise interest rates on the yen. Currently, on Polymarket, the odds of a rate hike are as high as 98%, which means that a rate hike by the Bank of Japan this week is almost a certainty.

What impact does this have on Bitcoin? Looking at Japan’s recent rate hikes:

March 2024 (ending negative interest rates);
July 2024 (raising to 0.25%);
January 2025 (raising to 0.5%);
This time (raising to 0.75%) with a 98% probability.
The impact on Bitcoin during the previous three hikes was basically negligible, with no significant downward trend observed one or two months before or after. Although a yen rate hike may cause leveraged investors borrowing in yen to close long positions in the international market, Bitcoin still accounts for a very small part of the large financial system, so the impact is extremely limited.

However, the absence of a clear decline does not mean that a rate hike is necessarily bullish. In previous instances of the Bank of Japan raising rates, Bitcoin often experienced significant rallies around those times, mainly driven by large inflows into ETFs, which boosted Bitcoin’s strength.