Key Insights
Bitcoin weak demand despite a sizable discount in price underscores investor caution.
How the BOJ bond crisis could trigger another liquidity crisis and another major crash for risk-on assets.
Bitcoin price prediction in the event of an aggressive rate hike from the BOJ.
What if Bitcoin (BTC USD) price crashes to the $75,000 level before making its recovery above $100,000? While many analysts may not anticipate such an outcome, the probability of it happening may be higher than anticipated.
The Bitcoin price has been struggling to drum up robust bullish momentum to achieve more upside. However, the cryptocurrency has so far achieved limited upside from its November lows.
Moreover, market activity and weak demand characteristics highlight similarities with previous periods before capitulation.
This weak demand suggests that investors, especially smart money, were hesitant to buy back at recent levels.
The reason for the hesitation may underscore a much bigger danger for Bitcoin (BTC USD) that could unwind in the second half of December.
Bitcoin Price on Edge as the Bank of Japan (BOJ) Approaches Critical Decision
Japan’s central bank, the Bank of Japan, is reportedly scheduled to announce its interest rate decision on 19 December. Recent reports revealed that the bank may raise interest rates.
Experts believe that the BOJ may trigger another major crash if it raises rates. A trip down memory lane may explain why.
The BOJ caused a crash in early August 2024 when it announced a rate hike above 0%.
That announcement triggered massive concern across the market and heavy liquidity moves, especially out of risk-on assets.
This was because investors who previously borrowed the Yen at 0% or negative rates and used borrowed funds to buy dollar-denominated assets were forced to exit their positions.
The liquidity exodus could play out again if the BOJ raises rates. This time, the stakes may be higher because higher rates will stress the bond market and possibly force the AI bubble to burst.
The Yen is heavily intertwined in the global market courtesy of the carry trade. Experts believe that bond yields will rise if the BOJ raises rates.
This could be the spark that ignites the flow of liquidity out of risk-on assets, including the stock market. Some analysts have already expressed certainty that the BOJ will cut rates.
BOJ interest rates decision/ source: X courtesy of Crypto Aman
What Happens to Bitcoin When BOJ Raises Rates
Such an event could set the pace for more Bitcoin (BTC USD) downside, and the subsequent capitulation could push BTC below November 2025 lows.
Another major selloff will likely push BTC price down to the next major support level near $75,000. Perhaps even lower, depending on the level of disruption.
A Bitcoin crash to the $50,000 level would be less likely, considering the level of institutional demand that has been propping up the BTC price.
However, a hefty liquidity unwind would also stress test the business model that Strategy has been executing with its MSTR stock.
An unexpected mega crash would also impact the banking industry. Another banking crisis may fuel a rush back to Bitcoin, potentially putting it on track for a sharp recovery.
This is because Bitcoin is relatively detached from the banking segment. A massive discount may just be the opportunity that smart money investors have been waiting for.
While the future remains uncertain, the present is clear. Japan currently holds the cards, and its next move on 19 December may set the pace for some interesting times ahead in 2026.
The current situation underscores major cracks in the global financial system. The cascading events after next week may be the nudge that the market needs to move faster towards an upgraded monetary system.
AloJapan.com