Bitcoin Holds After BOJ Hike, Slides After Fed Shift

The Bank of Japan raised its benchmark interest rate to 1% on June 16, the highest level since September 1995. The board approved a quarter-point increase in a 7-1 vote. Governor Kazuo Ueda was absent and Deputy Governor Shinichi Uchida led the press briefing. Japan’s producer price index rose 6.3% year-on-year in May and headline consumer inflation was 1.4% in April.

Alongside the rate rise, the BOJ paused tapering of its government bond purchases and committed to buying roughly 2 trillion yen of Japanese government bonds each month from April 2027. The central bank combined higher short-term rates with continued support for long-dated government bonds.

Higher Japanese rates affect global markets through the yen carry trade. Investors had borrowed yen at low rates, converted the proceeds into other currencies, and used the funds to buy higher-yielding assets such as equities, emerging-market debt and crypto. When yen borrowing costs rise, that funding becomes more expensive and leveraged positions can be reduced.

Previous BOJ rate increases under Governor Ueda since March 2024 were followed by Bitcoin drawdowns of 18% to 33%. A surprise hike in August 2024 cut Bitcoin from about $64,000 to $49,000 in 48 hours and removed roughly $600 billion of market value from crypto.

On June 16 Bitcoin fell briefly in the Asian session but recovered to trade near $66,000. Traders had priced a BOJ hike at above 90% probability before the meeting. The Nikkei 225 rose 0.46% after the announcement and the yen strengthened slightly to about 160.22 per dollar. Data show yen-denominated foreign-currency credit contracted 4.9% in 2025.

On June 17 the Federal Reserve kept its policy rate at 3.5% to 3.75% but removed an easing bias. The updated dot plot raised the year-end median policy rate to 3.8%, nine of 18 officials projected at least one rate increase in 2026, and the Fed raised its PCE inflation forecast to 3.6%. Spot Bitcoin and Ether exchange-traded products recorded about $111 million of net redemptions that day and spot Bitcoin slid toward $64,000.

Japan operates a licensing regime for crypto exchanges with around 16 licensed venues serving a large retail base. Industry estimates value the domestic exchange market at about $3.7 billion in 2025 and project growth to roughly $28 billion by 2034.

Market participants will monitor whether the BOJ follows with further rate increases without yield caps and how the Fed’s tighter stance affects dollar liquidity, leverage and flows into risk assets.