Bitcoin and Japanese interest rates: Are big changes coming to the market?

How are you all? I hope you are well. Today I would like to share my observations on some important aspects of the recent market and Bitcoin.

Recently, the Bank of Japan (BOJ) has been at the center of the market for regular policymaking. Specifically, they are discussing the possibility of raising their short-term interest rate from 0.5% to 0.75% at their upcoming policy meeting on December 18-19. This move is of particular importance to the market, as it could signal the end of the world’s last remaining negative interest rate regime.

For those who are not familiar with this, Japan has long controlled its economy through negative interest rates and yield curve control (YCC). In this situation, foreign investors would borrow yen at low interest rates and invest it in higher-return markets. But if interest rates rise, that “carry trade” practice could face major repercussions.

Active market participants see this increase as almost certain. Major platforms like Polymarkets and Kalshi are giving a 95–98% chance that the BoJ will hike by 25 basis points at the next meeting. This is a big signal for not only interest rates but also global financial flows.

Meanwhile, the news could also have an impact on Bitcoin and other cryptocurrencies. The US stock market has recently declined slightly, with the Nasdaq down nearly 400 points, while the Dow and S&P 500 also closed in the red. Japan’s Nikkei closed at 50,800 and the Topix at 3,420, presenting a mixed picture.

As for Bitcoin, it appears to be stable in the $89,000–$90,500 range. However, recent chart analysis shows that it is trying to fluctuate in the $92,500–$94,000 range. While the buying impact of big players is visible, there is a risk that Bitcoin will fall back to the old support level of $88,000–$89,000 unless new buying pressure comes.

Technical indicators are also showing some mixed signals. RSI is around 45, stochastic oscillator is 67, CCI is -2, ADX is 26 and MACD is slightly positive. However, almost all major moving averages are putting pressure on Bitcoin, especially 10-day and 200-day EMA/SMA.

Bullish potential: If Bitcoin breaks through $91,000–$92,500 and buying pressure increases, then there is a possibility of a rise to $94,000–$96,000.

Bearish potential: If it falls below $89,000, then there is a risk of a drop to the support level of $88,000 and if necessary, $80,500.

In my opinion, now is the time to wait and see. Only after the BOJ decision will the market have a clear direction. So at the moment we can only take a position based on the possibilities.

Posted Using INLEO