Bank of Japan Rattles Bitcoin as Yields Spike

Japanese monetary policy continues to steal the spotlight as one of the most influential forces on global markets. Yesterday, we highlighted that Bank of Japan Governor Ueda was due to speak and that his comments would likely move markets. That is exactly what happened, with Bitcoin starting to fall almost immediately after he began.

Ueda said the BOJ would consider the pros and cons of a rate hike at this month’s meeting, describing a hike as easing off the accelerator rather than applying the brakes. This triggered a rally in the yen against major currencies, but more importantly, Japanese government bond yields surged. The 10-year yield jumped nearly 4% to its highest level since June 2022, while the 30-year yield climbed to a new all-time high.

This move is bearish for risk assets. There is a strong short-term inverse correlation between yields and Bitcoin. When yields spike, Bitcoin typically falls, which is exactly what we have seen over the past couple of weeks.

There is also a strong inverse correlation between BOJ interest rates and Bitcoin. If the BOJ does raise rates this month, it would likely be bearish for Bitcoin, as higher borrowing costs make the yen carry trade more expensive. This forces institutions running the carry trade to unwind their risk-on positions, with Bitcoin often the first asset sold due to its liquidity. Markets are now pricing in an 80% chance of a rate hike, sharp jump from what was virtually a coinflip just last week.

Technically, Bitcoin has failed to hold key support and has now handed full control back to the bears. After starting the day above $90K, it has dropped below $84K and is now down 4% on the day, currently hovering around $86K.

Stormrake Spotlight: Pax Gold (PAXG) ($4,245)

PAXG was flat once again, making it three straight sessions with less than 0.5% movement from the open. Investors are not piling into the safe haven just yet, but structurally it remains extremely bullish.

BTC/USD Key Levels and Price Action:

Bitcoin’s bearish 24 hours have seen it lose the key $88,888 level and confirm a lower high, lower low and a bearish moving average cross. This may have been the bulls’ best shot at flipping the year back into the green. With that chance now gone, a retest of $80K looks more likely than a positive close for 2025.

BTC Total ETF Flows for 1 Dec: (data not avaliable at the time writing)

*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis

Create a brokerage account today

No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

Disclaimer

All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.