Bitcoin Price Still Threatened Despite Fed and BoJ Delivering Short-Term Relief

Key Insights:

• Bitcoin price rose 3% to $88,059.05 following the Bank of Japan rate hike and Fed commentary.
• BoJ raised rates to 0.75%, the highest since 1995, while the Fed signals no urgency for further cuts.
• Short-term stability masks medium-term liquidity uncertainty for 2026.

Bitcoin price climbed 3% to $88,059.05 on December 19 as markets digested policy decisions from the Bank of Japan and comments from New York Fed President John Williams.

Both central banks delivered outcomes largely in line with expectations, providing temporary relief to risk assets while reinforcing uncertainty about the 2026 liquidity landscape.

The Bank of Japan (BoJ) raised its short-term policy rate from 0.5% to 0.75%, marking the highest level since 1995 and the first move since January. Governor Kazuo Ueda signaled preparedness to hike further if inflation and wage projections held, though he remained deliberately vague on timing and ultimate endpoint.

Williams told CNBC there was “no sense of urgency” to cut rates again, stating the cuts already delivered “have positioned us really well” to bring inflation down while supporting a cooling labor market.

He called the November CPI print “pretty encouraging,” but did not use it as justification for accelerating easing.

Bitcoin Price Amid Expected Central Bank Moves

The combination of policy updates created a “hawkish hold” environment rather than triggering market stress.

Japanese 10-year JGB yields jumped to a 26-year high, yet the yen weakened back above ¥157 per dollar. Markets interpreted the BoJ message as “slow, data-dependent normalization” rather than aggressive tightening.

Global equities and crypto assets traded higher in the immediate aftermath. The S&P ground higher into year-end, while Bitcoin posted gains.

The total crypto market capitalization inched higher as traders processed the dual announcements.

Williams’ remarks reinforced the narrative from the previous week’s FOMC meeting: gradual disinflation, slowing but stable growth, and limited additional cuts penciled for 2026.

The Fed appeared comfortable with current policy positioning and preferred waiting for additional data before acting further.

BoJ Hike Ends Era of Zero-Rate Anchor

Even at 0.75%, Japanese rates remained deeply negative in real terms with core inflation around 3%. The move represented continued easy money by global standards, just less extremely accommodative than before.

The decision reinforced that Japan’s era as a zero-rate anchor was ending. However, Bitcoin price reacted positive to the news.

Higher JGB yields made domestic paper marginally less unattractive for Japanese institutions. Over time, this dynamic could pull capital back from foreign bonds and equities.

The shift also raised costs for the yen carry trade that funded leveraged positions across global risk assets. Several macro analysts flagged that a sustained BoJ hiking path represented an under-priced risk for carry-heavy trades.

The channel to crypto operated mainly through yen carry and global liquidity rather than Japan’s domestic demand.

When yen funding approached zero, hedge funds and macro desks borrowed cheaply in JPY to deploy into higher-yielding assets, including US credit, equities, and Bitcoin.

As the BoJ tightened and JGB yields rose, that trade became less attractive and more sensitive to foreign exchange moves.

Episodes of BoJ tightening or hawkish signaling in 2024-25 tended to coincide with 20-30% drawdowns in BTC as carry positions were cut and global liquidity contracted.

The nuance this time was that the yen weakened rather than strengthened, as Ueda emphasized policy remained below neutral with gradual changes ahead.

Bitcoin Price Short-Term Calm Masks 2026 Policy Fog

The Fed and BoJ delivered “good enough” short-term news for risk assets. No surprise: the tightening materialized, and no sudden dovish pivots emerged.

Both central banks reinforced how cloudy the 2026 liquidity outlook remained. For crypto, the Bitcoin price could muddle through current conditions as markets absorbed the balanced policy messages.

The medium-term trajectory hinged on a highly uncertain central bank path, with neither the Fed’s cutting cycle nor BoJ normalization providing clear forward guidance. The combination of cooler inflation and “no rush” central banks was something markets could digest and had largely priced in.

The larger question for Bitcoin price in 2026 centered on whether renewed quantitative easing and liquidity expansion materialized, or whether choppy, politically noisy conditions kept funding unstable.

Today’s BoJ move carried symbolic weight but mechanical modesty. It did not immediately threaten risk assets or crypto, but nudged Japan away from serving as the world’s perpetual zero-rate funding source.

This raised the medium-term tail risk of yen-carry squeezes hitting the Bitcoin price and the broader speculative complex if the yen strengthened sharply.