Haciyev Reşit 
The Bank of Japan (BOJ) is signaling a possible interest rate cut in January 2026. With the yen trading around the 156 level against the U.S. dollar, import costs are rising, increasing domestic inflationary pressure. Since the crypto market has historically been sensitive to BOJ policy moves, investors are closely watching potential volatility in Bitcoin and altcoins.
BOJ Interest Rate Move in January 2026
The Bank of Japan has long pursued an ultra-loose monetary policy to support economic growth. However, on December 19, 2025, the BOJ raised its policy rate by 25 basis points to 0.75%, marking the highest level in nearly 30 years. BOJ officials stated that Japan’s interest rates remain low compared to other countries, contributing to yen weakness and inflationary pressure.
According to Polymarket data, there is a 97% probability that interest rates will remain unchanged in January, with only a 2% chance of a 0.25% cut. This has increased uncertainty in the market regarding the BOJ’s next move.
Yen Weakness and Its Impact on Crypto
Despite the December rate hike, the Japanese yen has continued to weaken against the U.S. dollar and is currently trading around 156 per dollar. Low interest rates push investors toward the dollar in search of higher yields. Historically, BOJ policy changes have led to sharp volatility in Bitcoin and other risk assets; in some periods, BTC prices fell by 20–25%.
“Loose monetary policies drive investors to seek assets that can preserve value. In such periods, Bitcoin stands out as a safe haven against currency weakness.” — Crypto Analysts
Possible Scenarios for Bitcoin and Altcoins
Historical data suggests that BOJ interest rate decisions can lead to high short-term volatility in the crypto market. For example, following a recent rate cut, Bitcoin dropped by around 5% in a single day, retreating to the $88,000 level. Despite this, many investors believe that expectations of rate hikes are largely priced in, which could limit market turbulence.
Ethereum and leading altcoins may also be affected by yen weakness and shifts in global risk appetite. Investors are aiming to hedge against potential volatility by diversifying their crypto portfolios.
Assessment
The Bank of Japan’s 2026 interest rate policy could trigger short-term volatility in the crypto market. Yen weakness and rising inflation pressure may drive investors toward digital assets such as Bitcoin and altcoins. Potential BOJ interest rate moves could spark volatility in the crypto market, creating both short-term risks and opportunities. During this period, investors may view digital assets as tools for both value preservation and portfolio diversification.
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