## Coming December 19: Will Japan's Interest Rate Hike "Wake Up" the Cryptocurrency Market?

The pressure from the prospects of an interest rate hike by the Bank of Japan is spreading across global financial markets. With the policy meeting scheduled for December 19 (Friday), investors are increasingly anxious as signals from Japan could become a "catalyst" for a sharp correction in the crypto market.

### Why is Japan's interest rate decision so important?

The answer lies in yen carry trade transactions (carry trade). For years, borrowing yen at extremely low interest rates to invest in high-yield assets—from stocks to cryptocurrencies—has been a favored strategy among many global investors.

When the Bank of Japan raises interest rates, the cost of borrowing yen skyrockets. This forces investors to hurriedly close leveraged positions to cut losses, leading to frantic sell-offs in the market.

### The numbers the market is waiting for

According to forecasts from major trading desks, the Bank of Japan is expected to raise interest rates by 25 basis points, bringing the rate to 0.75%—this will be the first increase in 11 months and the highest in decades. Governor Kazuo Ueda is also expected to clarify the next steps in rate hikes, with policies likely to continue tightening until reaching 1% by mid-2025.

### How will Bitcoin and Ethereum be affected?

History shows that every time Japan tightens monetary policy, Bitcoin tends to experience sharp corrections ranging from 30% to 50%. According to the most pessimistic forecasts, if the rate hike is announced, Bitcoin could drop to $74,000, or even to $63,000 in the worst case.

Currently, Bitcoin is trading at **$90.64K** with **-0.26%** volatility over the past 24 hours, while Ethereum is at **$3.11K** with **-0.09%** in the same period. Although these figures remain relatively solid, uncertainty from Japan is making market sentiment unusually sensitive.

### Market sentiment: Chaos and contradiction

Even positive news no longer stimulates the market. When the US Federal Reserve just cut interest rates by 25 basis points, instead of excitement, the market fell into panic. Bitcoin dropped about 2.5%, altcoins declined more sharply, and the total market lost 3%.

Market reactions are inconsistent—sometimes up 0.66%, other times only +0.17%—indicating investors are waiting for a "decisive" event to determine the next direction. December 19 could very well be that "accounting" day.

### Conclusion: Storm or just passing clouds?

Some believe this will be the "final shake" before a strong market recovery. However, warnings have also been issued: if carry trade transactions collapse en masse, there could be another deep decline ahead.

Currently, the cryptocurrency market remains in a highly sensitive "waiting for news" state. All signals from central banks, especially Japan—one of the most active cryptocurrency trading hubs in the world—could change the entire landscape. Traders and investors are preparing for all scenarios in the coming days.