Bitcoin rises to $66,000 after Bank of Japan rate hike

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Bitcoin rises to $66,000

Bitcoin’s reaction

Immediately after the decision, BTC rose from around $65,600 to $66,000. The Japanese yen weakened at the same time, moving from around 130 to 130.35 yen per U.S. dollar.

Rate hikes are usually considered negative for risk assets, including cryptocurrencies. This is especially true when it comes to the Bank of Japan, as the country’s long period of ultra-low rates supported global stock and bond markets for many years.

The crypto market’s positive reaction was likely linked to the softer element in the regulator’s decision. The Bank of Japan decided to pause the reduction of its bond purchases.

As InvestingLive noted, the pause in reducing government bond purchases from April 2027 and the decision to keep monthly JGB purchases at around 2 trillion yen make the overall picture more complicated. Such a move removes part of the pressure on long-term yields and may be seen as a concession to the government, which is concerned about borrowing costs.

In other words, the Bank of Japan raised its short-term rate while also trying to limit the rise in government bond yields. This may help keep long-term borrowing costs under control, support financial markets, and partly offset the effect of tighter short-term policy.

As a result, the rate hike itself was expected, while the softer signal on bond purchases helped calm markets. This is likely what supported Bitcoin’s recovery.

Why BTC watches the Bank of Japan

Bank of Japan decisions matter for Bitcoin not directly, but through global liquidity and risk appetite. For decades, Japan remained a source of cheap money: investors borrowed yen at low rates and invested the funds in higher-yielding assets abroad — stocks, bonds, commodities, and cryptocurrencies. When the Bank of Japan raises rates, such trades become less attractive: borrowing costs rise, some investors reduce positions, and pressure can spread to all risk assets, including BTC.

But the market reaction depends not only on the rate hike itself. If the regulator also sends a softer signal — for example, by not rushing to reduce bond purchases and trying to limit the rise in long-term yields — investors may interpret this as support for liquidity. In this scenario, Bitcoin can recover from its initial decline because the market sees that short-term policy has become tighter, but the Bank of Japan is not yet ready to sharply remove support from the financial system.

As a reminder, Japanese exchange Bitbank warned users about possible restrictions related to the Polymarket platform.

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