Bank of Japan Rate Hike Sends Bitcoin Price Crashing to $65.5K, But Bulls Manage to Defend Critical Support

Earlier today, the Bank of Japan raised interest rates to 0.25% leading to a strong volatility in Bitcoin, equity, and the Japanese Yen.

The crypto market experienced turbulence on Thursday after the Bank of Japan announced an interest rate hike and a reduction in bond purchases. At the time of writing, the Bitcoin price dropped to the crucial support of $65,500 before bouncing back above $66,000.

However, the central bank raised interest rates to 0.25%, which led to strong volatility in Bitcoin, equity, and the Japanese Yen. Additionally, the bank stated that it would be reducing its monthly bond purchases to around ¥3 trillion ($19.6 billion) by the first quarter of 2026. Notably, analysts were expecting a more aggressive reduction in the bond-buying program.

Due to the continuous fall of the Japanese Yen against the US dollar, the central bank was forced to conduct rate hikes this year. This marks the first time in two decades that interest rates have turned a net positive in Japan. In an interview with Bloomberg, Charu Chanana, head of currency strategy at Saxo Markets, said:

“This must be one of the BOJ’s most hawkish moves given how low it has set the standard to be. Pressure on the yen will likely continue if the Fed stays away from a clear indication of a September rate cut later today. Japanese equities warrant a cautious stance, and banks will likely be disappointed by the shallower BOJ cut to bond purchases.”

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