The Bank of Japan (BOJ) has announced its new interest rates, the highest since 1995. At the same time, a macro divergence is taking place in the global economy across three assets that move together.
That is, the global money supply and stocks are near an all-time high (ATH), while Bitcoin and crypto are falling. For example, BTC is 56% below its ATH of around $126,000, while Ethereum [ETH] is down 64% from its peak of $4,953.
Will the rise amplify the crypto pullback, as has historically been the case?
The Bank of Japan raises interest rates to the highest level in 31 years
The BOJ raised interest rates to 1%, a 31-year high, but the Japanese stock market was bullish, as was Bitcoin and the broader crypto market. This increase further extended Japan’s historic shift from ultra-easy monetary provision.
This move will test not only stocks and Bitcoin, but also Japanese Yen (JPY) stablecoins. When JPY stablecoins are used for transactions, the supply remains stable, but when it comes to exposure to the Yen, the supply shrinks.
As such, the JPY is strengthening as the world’s last major source of cheap financing tightens. Borrowing from JYP becomes expensive to maintain, negatively impacting cryptocurrencies and stocks.
Historical data shows that these increases have led to the deleveraging of several global assets.
Meanwhile, Japan’s Nikkei remained green following the news. In fact, it added $64.40 billion, likely due to the US-Iran peace deal.
There was a short-term shift in sentiment from fear to opportunity, but the real question was the impact of the BOJ rate hike.
Will Bitcoin and crypto repeat history?
For crypto, a sharp strengthening of the JPY could create correlated selling pressure in Bitcoin [BTC] and high beta altcoins. The Bitcoin price has seen a sharp sell-off of 20%-30% after each of the last four rate hikes by the BOJ.
In March and July 2024, Bitcoin fell by over 17% and 25% respectively, while BTC lost over 30% in January 2025. In December 2025, BTC rose 15% before falling sharply from $95,000 to $60,000.
With that data, traders could expect Bitcoin and crypto to lose similar percentages as before. However, there has been a shift in sentiment following a period of fear that has persisted since the start of the US-Iran war in late February.
High beta altcoins such as Ethereum [ETH]Binance coin [BNB]Ripple [XRP]and Solana [SOL] may face a similar fate.
- BOJ raises interest rates to 1%, highest in 31 years, as global assets diverge.
- Bitcoin and crypto could see a decline of 20% to 30% if the JPY strengthens amid rate hikes, as they have done in the past.