Bitcoin benefits from surprising Yen decline after BOJ interest rate hike: Market analysis of the USD exchange rate

The recent monetary tightening by the Bank of Japan has led to counterintuitive market behavior. While higher interest rates would traditionally strengthen a currency, the Japanese Yen surprisingly weakened. This impacts global carry-trade positions and consequently the crypto markets. Traders with large positions—such as 500,000 Yen against the USD exchange rate—thus have significant reallocation opportunities and new market prospects.

BOJ Rate Hikes and the Yen Paradox

The Bank of Japan raised interest rates to their highest level in nearly 30 years. This monetary policy measure should have strengthened the Yen. Instead, the currency lost significant value—a phenomenon that concerns market observers.

The reason lies in Japan’s political situation. Prime Minister Sanae Takaichi, who took office in October, had outlined extensive spending plans. Higher borrowing costs now threaten these economic measures. This political uncertainty led investors to sell off the Yen rather than buy it. The 10-year Japanese government bond yielded 2% for the first time since 2006, indicating substantial market adjustments.

Unwinding carry-trade positions—where investors borrowed cheaply in Yen—played a central role. With a USD-Yen rate around 500,000 Yen per larger capital allocation, pressure and revaluations emerged in the global financial market.

Bitcoin and Altcoins Benefit from Market Dynamics

Bitcoin responded to market volatility with a clear upward movement. The cryptocurrency temporarily broke the $88,000 mark, even though BOJ news would typically pressure risk assets. Current data show Bitcoin trading at $78,510 with a 24-hour decline of 6.58%—an indicator of ongoing volatility in the markets.

Ethereum followed the general upward trend, gaining 3.4% in the past 24 hours before falling back to $2,450 (-9.57% in 24 hours). Other major altcoins like BNB and SOL showed more moderate movements below 1%. The broader CoinDesk 20 Index rose by 1.3%—a sign of an expanding market recovery across the entire crypto spectrum.

Inflation, Federal Reserve, and Structural Crypto Demands

Against the backdrop of BOJ developments, surprisingly moderate inflation data appeared in the US. The consumer price index in November rose only 2.7%, below expectations. These figures increased the likelihood that the Federal Reserve might cut interest rates in the future—a positive sign for risk assets including cryptocurrencies. However, futures markets do not yet expect a rate hike next month.

A significant development is the emerging structural demand for digital assets. According to Ira Auerbach, head of Tandem at Offchain Labs and former head of digital assets at Nasdaq, retirement plans are preparing to include target-date and balanced funds with crypto exposure of 0.5% to 1%. This marks the beginning of a long-term, less cyclical demand pattern that treats digital assets as a regular portfolio component.

Capital in AI Infrastructure: Profitability Concerns Grow

Although capital is flowing aggressively into AI infrastructure projects, skepticism about profitability prospects is growing. QCP Capital warned that while large companies like Oracle and Intel are significantly increasing their investments, AI-related revenues are stagnating in comparison. This could lead to substantial revaluations of risky assets if expected profits do not materialize.

Interestingly, several crypto companies are benefiting from the AI hype, especially Bitcoin miners. They are increasingly investing in AI infrastructure and securing billion-dollar deals—a trend that is significant for both miners and the entire industry.

Regulatory Environment: GENIUS Act Shaping 2026

The United States is close to solidifying the regulatory framework of the GENIUS Act by 2026. Stablecoin issuers, who have relied on offshore jurisdictions so far, might see considerable advantages in relocating their reserves and operations back to the US. This could trigger a significant influx of digital assets into the US-regulated space and bring traditional financial institutions closer to crypto markets.

Governance and Token Events

In December, several key votes took place. Lido DAO voted on a transformative package that planned to evolve from a pure staking protocol to a diversified DeFi product suite over three years. CoW DAO decided on dissolving the Sprinter Solver Bonding Pool, returning 500,000 USDC and 1.5 million COW to the original investors. Arbitrum DAO activated the ArbOS 51 upgrade with improved scaling parameters.

Technical Perspective and Price Movements

Bitcoin/USD is currently moving between support at $84,200 and weekly resistance at $90,500. Technical analysis reveals a clear bullish RSI divergence—momentum is increasing despite price consolidation. A decisive weekly close above $90,500 would confirm this divergence and likely trigger a trend continuation toward the 0.236 Fibonacci target at $100,400. Until then, the 0.382 Fibonacci level at $84,200 remains a critical support point.

Market Data Overview

BTC dominates with 59.94% of market capitalization. The Ether-Bitcoin ratio stands at 0.03347. The Bitcoin hash rate (seven-day average) is at 1.031 EH/s, while the hash price is $37.57. CME futures show open interest of 120,865 BTC. Valued in gold, Bitcoin is priced at 20.3 ounces, with a market cap ratio of 5.9% to gold.

The 10-year US bond yield rose by 2.9 basis points to 4.145%. Global stock indices showed mixed signals: the S&P 500 closed up +0.79%, the Nasdaq +1.38%, while European indices declined slightly. Commodities—silver futures increased by 1.73% to $66.35—benefiting from general uncertainty.

Market Outlook

The dynamics between Japanese monetary policy, US inflation, and structural crypto demands create a complex market environment. Bitcoin and the broader crypto market are repositioning amid opportunities presented by unwinding carry trades and the search for alternative asset classes. With upcoming regulatory measures and steadily growing institutional participation, the coming months could mark a turning point in crypto market development.