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Japan’s Higher Rates Puts Bitcoin
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Japan’s Higher Rates Puts Bitcoin
Japan’s Higher Rates Puts Bitcoin in the Crosshairs of a Yen Carry Unwind
Japan’s Higher Rates Puts Bitcoin in the Crosshairs of a Yen Carry Unwind
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin rebound from November’s lows.
By Shaurya Malwa
Dec 6, 2025, 3:30 a.m.
What to know:
- The Bank of Japan is expected to raise interest rates to 0.75% at its December meeting, the highest since 1995, affecting global markets including cryptocurrencies.
- A stronger yen could lead to de-risking in macro portfolios, impacting liquidity conditions that have supported bitcoin's recent recovery.
- Governor Kazuo Ueda indicated a high probability of a rate hike, with officials prepared for further tightening if their economic outlook supports it.
The Bank of Japan is preparing to raise interest rates at its December policy meeting, a shift that would lift the country’s benchmark rate to its highest level since 1995 and potentially reverberate through global risk markets, including crypto.
People familiar with the matter told Bloomberg that policymakers are leaning toward a 25-basis-point hike to 0.75% at the Dec. 19 meeting, contingent on no major shock to global markets or Japan’s domestic outlook.
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The yen strengthened after the report, climbing from just above 155 to around 154.56 per dollar on Friday.
Such implications run through the yen-funded carry trade, one of the financial world’s oldest macro linkages. Hedge funds and proprietary trading desks have historically borrowed yen at ultra-low rates to finance leveraged positions in higher-beta assets — a structure that persisted through nearly three decades of near-zero BOJ policy.
A shift toward higher Japanese rates reduces the attractiveness of that trade and may force positioning adjustments in markets where leverage and liquidity are most sensitive, including bitcoin.
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin rebound from November’s lows.
BTC slipped toward $86,000 earlier in the week before recovering to over $93,000 alongside U.S. equities, and remains heavily influenced by global rate expectations after a month of macro-driven volatility.
Governor Kazuo Ueda signaled Monday that the board would make an “appropriate decision” on rates, language similar to remarks delivered ahead of prior hikes. Market pricing now implies almost a 90% probability of a December move. Prime Minister Sanae Takaichi’s key ministers are not expected to oppose the shift.
BOJ officials are also likely to indicate readiness for further tightening if their outlook materializes, though they remain cautious about committing to a path.
For bitcoin traders, the risk is less about Japan’s terminal rate and more about the directional break from a decades-long source of global liquidity.
If yen funding costs continue to rise, leveraged macro funds may trim exposure to BTC and other high-volatility assets. But a controlled, incremental BOJ tightening, without sharp equity drawdowns, may have limited impact in the near term, especially with U.S. rate-cut odds rising.
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