Bitcoin experienced a notable rebound following the Bank of Japan's (BOJ) decision on Friday, December 19, 2025, to raise its benchmark interest rate. The central bank increased the unsecured overnight call rate by 25 basis points, bringing it to 0.75%, the highest level seen since 1995. This move, decided unanimously after a two-day policy meeting, aligns with market expectations.
The cryptocurrency market responded positively to the news, with Bitcoin leading the charge and briefly surging over 2%. This rally occurred amidst a backdrop of generally optimistic reactions to Japan's policy shift, even though interest rate hikes are typically considered headwinds for crypto and other risk assets.
Arthur Hayes, the former CEO of crypto exchange BitMEX, has reiterated his bullish outlook, anticipating a weaker Yen and a soaring Bitcoin price. Hayes boldly predicted that the Japanese Yen would reach 200 against the dollar and Bitcoin would surge to $1 million. He argues that the Bank of Japan will likely maintain negative real interest rates, which would be beneficial for Bitcoin. Hayes views Japan's continued stimulus and money printing as a sign of instability in fiat currencies, which will drive adoption of decentralized financial systems like Bitcoin.
Other analysts share Hayes' optimistic perspective. Chinese crypto analyst Ban Mu Xia identified key resistance ranges for Bitcoin between $98,600 and $107,000, with a strong resistance level at $112,500. Trader Eugene Ng Ah Sio suggested that most altcoins have reached the end of their downtrends, signaling a potential buying opportunity, though he cautioned that major coins might still decline further. Garrett Jin, known as "BTC OG Insider Whale," also jumped in with a bullish call, setting Bitcoin's first target at $106,000 and Ethereum's at $4,500.
Temple 8 Research, a research project, suggests that political factors might limit further rate hikes by the BOJ before 2027, to protect the Yen and manage interest payments on Japan's substantial stimulus package. They argue that aggressive fiscal stimulus and rate hikes cannot coexist.
The rise in Bitcoin's price coincided with gains in US stock futures, with Nasdaq 100 futures up 1.5%. This indicates a broader positive sentiment in the market. Some measures of investor sentiment are showing fear, which can be a positive sign for future growth.
