The Bank of Japan's rate hike risk is approaching; Bitcoin's technical indicators show signs of adjustment

Current BTC price is $85.59K, with a 24-hour decline of -0.68%. Recently, many analysis institutions have issued warnings: the Bank of Japan is expected to officially announce an interest rate hike on December 19, which could trigger a chain reaction in the global crypto market.

Yen Appreciation Triggers Arbitrage Collapse

Historical data shows that these concerns are not unfounded. Since 2024, whenever the Bank of Japan raises its policy interest rate, Bitcoin’s subsequent decline often exceeds 20%. The market logic behind this is: rising Japanese interest rates will directly boost the yen’s value, which immediately impacts financing costs worldwide.

In recent years, international investors have widely adopted a cross-border arbitrage strategy—borrowing low-interest yen, exchanging it for dollars, and investing in high-risk assets like Crypto. Once the Bank of Japan tightens its policy, this financial chain faces pressure: borrowing costs surge, forcing participants to quickly close positions and sell off digital assets to repay debts. Small retail investors are hit hardest, often forced to cut losses during market panic.

Liquidity Contraction Causes Market Chain Reactions

When the Bank of Japan “tightens the tap,” the available liquidity in global markets shrinks significantly. As a highly capital-dependent asset, Bitcoin easily loses upward momentum in this environment. As hot money flows out, market participants’ risk appetite also drops sharply—no one wants to chase volatile assets during liquidity crunches.

Technical Indicators Show Signs of Weakness

From candlestick patterns, Bitcoin’s chart has formed a so-called “bear flag pattern”—usually a warning sign of a major correction. Industry technical analysts generally point out: if the rate hike is confirmed, Bitcoin is likely to retrace downward to the support zone of $70K to $72.5K.

Market Outlook

Overall, the policy shift by the Bank of Japan will transmit to the Bitcoin market through three channels: the disintegration of arbitrage trades, liquidity reduction, and shifts in market sentiment. Investors should closely monitor the outcome of the December 19 central bank meeting and subsequent market reactions. Regardless of short-term volatility, the medium- to long-term market fundamentals still require further observation.