Bitcoin Volatility Rises Ahead of BoJ Rate Hike

Bitcoin faces heightened volatility risks as the Bank of Japan prepares for its policy meeting on December 18 and 19, where officials are widely expected to raise interest rates by 25 basis points to 0.75 percent, the highest level since 1995. The anticipated move, signaling Japan's ongoing shift away from decades of ultraloose monetary policy, has analysts warning of potential downward pressure on the cryptocurrency, based on patterns observed after previous hikes.

The decision comes amid Bitcoin's current trading price of around 89,000 dollars, down slightly in recent sessions. Economists and prediction markets, including a Reuters poll and Polymarket, assign near-certainty to the rate increase, with probabilities exceeding 98 percent. Such a hike would mark Japan's fourth adjustment since resuming rate increases in 2024, following lifts in March, July of that year, and January 2025.

Historical data shows a consistent correlation between these Bank of Japan actions and Bitcoin price corrections. After the March 2024 hike, Bitcoin fell about 23 percent. The July increase preceded a roughly 26 percent to 30 percent decline, while the January 2025 move triggered a 31 percent...