Japan raises interest rates to their highest level in three decades, Bitcoin surges. Photo: Reuters
Benchmark interest rates hit a 30-year high.
Today (December 19th), the Bank of Japan (BOJ) raised its benchmark interest rate by 25 basis points to 0.75%, setting a new record high since 1995 .
This decision continues the normalization of monetary policy in the world's fourth-largest economy, after decades of ultra-low interest rates and aggressive easing. The BOJ said that while nominal interest rates have risen, real interest rates in Japan remain significantly negative.
Inflation is the main driver behind this move. Japan's consumer price index has remained above the 2% target for 44 consecutive months, with a 2.9% increase in the most recent month. However, inflationary pressures have not been accompanied by a commensurate improvement in income. Real wages have fallen for 10 consecutive months, indicating that rising living costs are still eroding purchasing power.
Japan only ended its negative interest rate policy at the beginning of last year, concluding an eight-year period of extreme easing. Even so, current interest rates remain significantly lower than in other developed economies, suggesting the BOJ is not in a hurry to drastically reverse its policy.
The central bank forecasts core inflation could fall below 2% by 2026, as food price increases cool and government price controls take effect. The BOJ still considers the current inflation cycle to be not entirely sustainable.
However, the decision to raise interest rates also risks exacerbating the weakening Japanese economy. GDP fell 0.6% compared to the previous quarter and 2.3% compared to the same period last year. Despite this, the BOJ still expects corporate profits to remain high and companies to continue raising wages next year.
Crypto reacts positively.
In the cryptocurrency market, the reaction to the BOJ's decision was more of a relief than a surprise. This is because the BOJ had been signaling tightening for weeks, giving investors time to prepare.
Bitcoin (BTC) surged in the Asian session, surpassing the $88,400 mark, quickly recovering from its intraday Dip around $84,450 and erasing the earlier sharp correction.
Bitcoin price fluctuations over the past 24 hours, screenshot from Coingecko at 2:15 PM on December 19, 2025.
Ethereum (ETH) surged nearly 5% in 24 hours, approaching $3,000. Most large - cap cryptocurrencies such as Solana (SOL), Cardano (ADA), and BNB also moved in sync.
Cryptocurrency price fluctuations in the top 100, screenshot from Coin360 at 2:15 PM on December 19, 2025.
The value of Derivative orders liquidated in the last 12 hours was $228 million, mainly concentrated in Longing positions.
Liquidation data on the Derivative market, screenshot from CoinGlass at 02:15 PM on December 19, 2025.
From a longer-term perspective, on-chain data suggests that selling pressure from long-term Bitcoin holders is weakening, after approximately 20% of the supply was recirculated back into the market over the past two years. However, this also means that subsequent rallies will require sufficiently strong new Capital inflows to sustain them, especially given the typically thin liquidation at the end of the year.
Crypto's performance mirrored a relatively calm reaction in traditional asset markets . Asian stocks rose, led by technology stocks. In the US, the S&P 500 gained 0.79% and the Nasdaq 100 jumped 1.51%, driven by cooling US inflation data . Expectations of a Federal Reserve interest rate cut in the coming months are gradually improving global risk appetite.
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