Bitcoin Faces Downward Pressure as BOJ Prepares to Raise Interest Rates: Could Level $70K Happen?

The cryptocurrency market is currently in a state of uncertainty as Bitcoin (BTC) is trading around $91.15K, after experiencing a sharp decline of nearly 30% from the peak of $126K. The main reasons are not only due to internal market factors but also include upcoming monetary policy decisions from the Bank of Japan (BOJ) on December 19.

The Global Impact of Japan’s Interest Rate Decision

Although it may seem like an internal matter, Japan plays a crucial role in the global financial system. The country holds over 1.1 trillion US dollars in U.S. Treasury bonds, making it the world’s largest foreign creditor.

When interest rates are adjusted, it creates a domino effect across global markets. Recently, Japanese bond yields have risen to 2.94%, the highest since 1998. This makes carry trade strategies—where investors borrow yen at low rates to invest in higher-yield assets like cryptocurrencies—less attractive. As this model collapses, capital outflows from the cryptocurrency market and other risk assets could reach up to 500 billion dollars over the next 18 months.

Repeating History: Bitcoin’s Price Drop Pattern

Historical analysis shows a clear and notable trend:

• March 2024: BOJ announces interest rate hike → Bitcoin drops 23%
• July 2024: Next interest rate increase announcement → Bitcoin decreases about 26%
• January 2025: Third rate hike → Bitcoin plunges nearly 31%

The Polymarket prediction platform currently estimates a 98% probability of an interest rate hike on December 19, with some experts forecasting a possible increase of up to 75 basis points instead of the expected 25 basis points.

Worst-Case Scenario: Bitcoin Could Reach $70K

Based on this repeating pattern, leading crypto analysts like Merlijn The Trader warn that Bitcoin could face an additional 20-30% decline, pushing the price below the level of $70K after BOJ’s announcement. This would mean BTC losing about 28% of its current value.

The pressure is not only on Bitcoin. The entire cryptocurrency market is under strain, with total market capitalization dropping from $4.1 trillion to around $3.05 trillion. Major altcoins like XRP, Solana, and Cardano have lost about 40% of their value since October’s peak, and many memecoins have even fallen by 60-70%.

The Big Question: Will History Repeat Itself?

Fundamentally, BOJ’s interest rate hikes do not directly impact Bitcoin’s price. However, they trigger a chain reaction globally: Japanese bond yields rise → carry trade positions are closed → sell-off of high-risk assets → liquidity exits the cryptocurrency market. With three such instances in recent history, this pattern has proven its influence.

If history continues to repeat, the $70K level will be the next support zone that Bitcoin needs to defend. Investors are now waiting for December 19 to see whether a trillion-dollar policy decision from Japan could trigger a storm in the cryptocurrency market.