Bitcoin [BTC] is starting to feel the pressure of next week’s Bank of Japan (BoJ) decision.
With interest rates widely expected to increase by 25 basis points, markets appear to be adjusting early. Recent data shows that risks have already been contained, making the sell-off more likely to happen before the headlines.
This leaves room for a ‘sell the rumor, buy the fact’ reaction once the decision is announced.
Sayonara, BTC wins!
Bitcoin is ahead of the BoJ’s expected 25 basis point rate hike on December 19… and we know this setup all too well. Previous interest rate increases have repeatedly aligned with sharp declines in BTC as yen liquidity tightened and risk appetite declined.
In March 2024, Bitcoin fell about 23% after an interest rate hike. In July 2024, it fell another 26%. In January 2025 there was an even bigger drop of almost 31%. As another surge was widely expected to occur, traders appeared to reduce their risk early, causing BTC to fall before the announcement.
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The pattern obviously does not guarantee repetition. But it certainly explains why nerves rise quickly.
Sales may have started early
Investors don’t wait so that the policy decision can respond.
Source: Cryptoquant
During previous rate hikes by the BoJ, Bitcoin has seen inflows rise into the stock market following the announcement, indicating panic-driven spot selling.
This time, Exchange Netflows showed rising inflows even before December 19. This indicated early sales on the spot market and proactive risk reduction.
Source: Cryptoquant
Financing behavior also has a similar response.
During previous increases, financing rates collapsed after the decision. Now they have already fallen and become unstable, indicating that leverage was already decreasing beforehand.
This step was in line with expectations and was fully priced
What happens after the meeting?
That early adjustment changes the way this plays out. Unlike previous rate hikes, the BoJ’s shift has been discussed for months. The carry trades in the yen had already been unwound, and the tighter liquidity was no longer a shock. As a result, much of the pressure may already be reflected in the price.
What matters next is the yen’s reaction. If it strengthens post-decision, risky assets (including Bitcoin) could remain under pressure. But if the yen doesn’t rise much, the market may have little left to sell. In that case, short-term emergency measures are not off the table.
At this point, the rise itself matters less than how markets react once it’s finally over.
Final thoughts
- Bitcoin is weak against the expected 25 basis point interest rate hike by the BoJ. Traders reduce risk early and deleverage.
- BTC’s next move may depend on the yen’s reaction, rather than the interest rate decision itself.