Despite a week of encouraging economic signals from the United States, Bitcoin has failed to stabilize. Market sentiment is currently dominated not by a potential rally, but by apprehension surrounding an imminent policy shift from the Bank of Japan. Investors are concerned that a change in Tokyo’s monetary stance could trigger a chain reaction, adversely impacting cryptocurrencies and accelerating the recent downward trend.
Technical Picture Points to Further Weakness
The prevailing selling pressure is clearly visible on the price chart. Bitcoin is currently trading near $85,314, hovering dangerously close to its 52-week low. The cryptocurrency is forming a bearish flag pattern and remains below several key moving averages.
Technical analysts identify the $83,800 level as a critical final support zone. A decisive break below this threshold is seen as opening the door for a move down toward the yearly low around $74,423. Any attempt at a recovery faces significant resistance overhead. A substantial “sell wall” is noted at $93,000, where on-chain data indicates a large concentration of sell orders exists, effectively blocking upward momentum.
The Looming Threat to Yen Carry Trades
The source of market nervousness is the Bank of Japan’s (BoJ) interest rate decision expected today. Markets are pricing in a 99% probability that the central bank will raise its benchmark rate by 25 basis points to 0.75%—the highest level in nearly three decades.
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This move directly threatens the popular “Yen Carry Trade” strategy. In this approach, investors borrow inexpensive Japanese yen to fund investments in higher-yielding assets like cryptocurrencies. An increase in Japanese interest rates makes these loans more expensive, often forcing traders to sell their risk assets, including Bitcoin, to repay their yen-denominated borrowings. Market experts point to historical precedent: during the BoJ’s rate hikes in March and July of 2024, Bitcoin’s price reacted with declines of 20% to 30%.
Positive US Developments Overwhelmed by Global Concerns
Current worries about Japan are overshadowing positive developments from the US. This week, the Federal Reserve unexpectedly eased restrictions on banks dealing with cryptocurrencies, a move analysts refer to as “Operation Chokepoint 2.0.” Furthermore, US inflation data for November came in lower than forecast at 2.7%.
However, these positive impulses were short-lived. Institutional investor flows also reflect uncertainty. While US spot Bitcoin ETFs recorded inflows of $457 million on Wednesday, investors withdrew approximately $194 million from these funds on Thursday.
Today’s trading session is likely to set the tone for the beginning of 2026. Beyond the BoJ decision, additional volatility is expected from a major quarterly “options expiry,” with contracts valued at over $7 trillion set to settle. If the $83,800 support level fails to hold against the selling pressure, investors should prepare for further downward movement.
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