Bitcoin Faces Drop to $70K as Bank of Japan Rate Hike Odds Soar

Bitcoin is under renewed pressure as markets price in a near-certain Bank of Japan (BOJ) rate hike next week. Traders now expect Japan to raise rates to 0.75%, tightening global liquidity conditions and negatively impacting risk assets.

Is Bitcoin Priced for BOJ Rate Hike?

A Bloomberg chart shared by analyst Ted Pillows show more than a 90% probability of a 25-basis point hike at the December 18–19 meeting. That expectation has surged after comments from Bank of Japan policymakers as highlighted by Reuters.

An analyst has predicted that Bitcoin may trade around the $70,000 area. Past Bank of Japan hikes have coincided with 20% to 25% Bitcoin drawdowns. The theory centers on the yen carry trade.

When Japan raises rates, borrowing yen becomes more expensive. Hence, investors often sell riskier assets, including cryptocurrencies. However, long term investors will keep on buying even during volatility. For instance, Michael Saylor has signaled more Bitcoin purchases for Strategy despite extreme fear in market sentiment.

Still, market data suggests that the increase is already reflected in current market expectations. Polymarket odds that the increase will be 25 basis points in December is currently 98%. But expectations of bigger increases are low.

Will Bitcoin Fall Below $80K This Year?

Also, prediction market data shows traders are increasingly preparing for deeper downside. Kalshi contracts now place a 28% chance that Bitcoin falls below $80,000 before year-end.

BTC price is $88,805 on CoinMarketCap. Sentiment is still weak since crypto prices are being influenced by macro-economic events.

Another important factor is the increase in rates by the Bank of Japan. The result of the meeting is expected to establish the trend for Bitcoin price till the end of the year.