Bitcoin turned higher in Asian trading after the Bank of Japan raised its policy rate to 1%, the highest level since 1995. The decision crossed the wires at about 3:19 UTC on June 16, lifting the benchmark rate by 25 basis points from 0.75%. Soon after the announcement, BTC moved from roughly $65,600 to around $66,000.
Hawkish inflation message met with a softer bond signal
The rate move was largely in line with market expectations. Still, the BOJ pointed to upside inflation risks, saying higher oil prices were feeding into consumer goods faster than expected as geopolitical tensions added pressure. That kept the door open to more tightening if price gains continue to build.
Yet the market reaction was shaped by more than the rate increase. A key detail was the BOJ’s decision to pause bond tapering. According to the report, monthly Japanese government bond purchases will be fixed at about 2 trillion yen from April 2027. That reduces a source of upward pressure on long-dated yields and was seen as a measure that could limit borrowing costs even while short-term rates move higher.
Yen weakens as traders focus on the policy mix
After the announcement, the Japanese yen weakened from about 130 per U.S. dollar to 130.35. Rate hikes usually weigh on risk assets such as cryptocurrencies, especially from the BOJ, whose ultra-low-rate era had long supported global stock and bond markets. This time, price action suggested traders paid closer attention to the more accommodative element embedded in the bond-purchase plan.
Japan is also dealing with firmer domestic price pressures after years of very low inflation. Wholesale prices rose more than 6% year over year in May, the fastest pace in three years. Headline inflation was 1.4% in April, still below the BOJ’s 2% target. That combination of tighter short-term rates and a softer approach to bond purchases helped explain why bitcoin bounced instead of extending its earlier decline.