Crypto Market Faces Further Downside as Bank of Japan Hints at More Rate Hikes

The crypto market could see a steeper decline amid new signals coming from the Bank of Japan. The BOJ is pivoting towards raising interest rates amid inflation risks.

Crypto Market on Edge Amid BOJ Rate Hikes

According to a Reuters report, the Bank is gearing up to increase its interest rates higher due to the recent fall in value of the yen and inflation risks.

This comes just as the BOJ increased its interest rate last month. The bank hiked its rate to a 30-year high of 0.75%. At the time, the crypto market took the news quite well, with Bitcoin maintaining its price range.

Sources say the policymakers could have reasons to raise the rates as soon as April due to the Japanese yen falling rapidly amid inflation pressure. The central bank ended a decade-long stimulus in 2024 and made several hikes in the short term.

Traders are already pricing in a 75% chance that rates will increase by 1% by September. The Bank of Japan’s quarterly report would be due on Friday. Experts say this would shed more light on the country’s conditions for further rate increases. The report is expected to document the revised economic forecast for fiscal year 2026.

It would also document the edge of the economy amid the government’s stimulus package. The bank will also revise the fiscal 2026 core consumer inflation forecast as the crypto market is awaiting the next move.

However, it was also reported that some analysts believe that some officials feel there is no need to further adjust interest rates. A statement was released by JP Morgan Securities’ Chief Economist, Ayako Fujita, explaining her observations.

“So far, the BOJ has maintained a negative stance toward consecutive rate hikes.” “Whether the recent yen depreciation will prompt a change in this stance is a key point to watch,” she said.

Citigroup Projects Three Interest Rates in 2026

Experts from Citigroup have forecast that the Bank of Japan will increase their interest rates three times in 2026, as reported by Bloomberg. They also said that if the yen weakened further against the dollar, it is expected that the interest rate will increase by 1%.

If this is what happens, the crypto market might be in grave danger given the past Bitcoin crash patterns. According to Citigroup’s Market Leader, Akira Hoshino, said a rate hike could be seen in April, July, and towards year-end.

“Put simply, the yen’s weakness is being driven by negative real interest rates,” he said. “The BOJ has no choice other than to address this if it wants to reverse the exchange rate’s direction.”