The Bank of Japan (BOJ) released its new interest rates, the highest since 1995. At the same time, a macro divergence is happening in the global economy across three assets that have been moving together.
That is, the global money supply and equities are near all-time highs (ATH) while Bitcoin and crypto are declining. For instance, BTC has been 56% below its ATH of about $126,000 while Ethereum [ETH] has been down 64% from its peak of $4,953.
Will the hike amplify the drawdown in crypto as it has historically?
Bank of Japan hikes interest rates to a 31-year high
The BOJ raised rates to 1%, marking the highest level in 31 years, but Japan’s stock market was bullish, just like Bitcoin and the broader crypto market. This hike extended Japan’s historic shift away from an ultra-easy monetary supply.
This move not only tests equities and Bitcoin but also Japanese Yen (JPY) stablecoins. If JPY stablecoins are used for transactions, supply stays sticky, but if they’re for Yen exposure, supply contracts.
As such, JPY strengthens as the world’s last major source of cheap funding tightens. The borrowing of JYP becomes expensive to maintain, negatively impacting crypto and equities.
Historical data show that these hikes have forced deleveraging across multiple global assets.
Meanwhile, Japan’s Nikkei stayed green in the wake of the news. In fact, it added $64.40 billion, probably because of the agreement between the U.S. and Iran’s peace deal.
There was a short-term shift in sentiment from fear to opportunity, but the real question was the impact of the BOJ’s hike.
Will Bitcoin and crypto repeat history?
For crypto, a sharp strengthening of the JPY could create correlated sell pressure in Bitcoin [BTC] and high-beta altcoins. Bitcoin price has seen a sharp 20%-30% sell-off after each of the last four BOJ rate hikes.
In March and July 2024, Bitcoin declined by more than 17% and 25%, respectively, while in January 2025, BTC lost more than 30%. In December 2025, BTC rose by 15% before sharply declining from $95,000 to $60,000.
With that data, traders could expect that Bitcoin and crypto would lose similar percentages as before. However, there has been a shift in sentiment following a period of fear that has persisted since the U.S.-Iran war began in late February.
High-beta altcoins like Ethereum [ETH], Binance Coin [BNB], Ripple [XRP], and Solana [SOL] may face a similar fate.
Final Summary
- BOJ raises interest rates to 1%, the highest in 31 years, as global assets show divergence.
- Bitcoin and crypto could see 20%-30% declines if the JPY strengthens amid rate hikes, as they have historically done.