BOJ Rate Hikes and Their Macroeconomic Impact on Bitcoin: Assessing the Risk of Prolonged Yield Increases vs. Sudden Yen-Driven Selloffs

The yen's role as a funding currency has also evolved. While a weaker yen historically supported Bitcoin (with each one-point drop in the U.S. dollar index adding ~1.2% to BTC over 10 days), Japan's macroeconomic instability has shifted attention to other currencies like the Swiss franc (CHF) as better indicators of global risk sentiment according to market analysis. This suggests that Bitcoin's correlation with the yen is weakening, but its sensitivity to global liquidity conditions remains intact.

Investment Implications and the Path Forward

For investors, the key lies in distinguishing between short-term volatility and long-term structural risks. Sudden yen-driven selloffs, while painful, often create buying opportunities as liquidity restructures. For example, Bitcoin rebounded from its 2025 low of $85,000 to $92,000 within weeks as market narratives consolidated according to market data. However, prolonged yield increases pose a more enduring challenge, particularly if global liquidity tightens further.

The BOJ's next policy meeting on December 18–19 will be critical. If the central bank signals a faster-than-expected normalization, Bitcoin could face renewed downward pressure. Conversely, a measured approach may allow the market to absorb rate hikes without triggering a full-blown selloff. Investors should also monitor U.S. Federal Reserve policy, as a potential rate-cut cycle could shift capital back into risk assets, supporting Bitcoin's recovery.

Conclusion

The BOJ's rate hikes are reshaping global financial markets, with Bitcoin serving as a sensitive indicator of liquidity and risk appetite. While sudden yen-driven selloffs pose acute volatility risks, prolonged yield increases create a more persistent headwind. Investors must navigate this dual threat by closely monitoring JGB yields, BOJ policy signals, and global liquidity conditions. In the long term, Bitcoin's unique positioning as a non-sovereign asset may offer a hedge against macroeconomic uncertainty, but the path to that outcome will remain turbulent.