BOJ Rate Hike Looms, Bitcoin Sees Up to 25% Correction

Bitcoin is facing a potential 20-25% correction as the Bank of Japan (BOJ) prepares to raise interest rates on June 16 and US bond yields reach historic highs.

Crypto analyst Darkfost warned that BTC's risk premium has shrunk as long-term bond yields offer comparable or better returns, making it less attractive for investors to hold onto cryptocurrency exposure.

The analyst noted that rising yields have historically coincided with slowing BTC price action. With the current constrained liquidity and probability of further rate hikes, Bitcoin is facing a new stress point.

A separate analysis by XBTkaz found that across four BOJ rate hikes in the modern BTC era, prices dumped every single time, with an average correction ranging between 25% and 30%. A fifth BOJ rate hike is now expected on June 16, with markets anticipating a new rate of 1%.

XBTkaz explained that higher yen borrowing costs trigger unwinding of yen-funded carry trades, reducing global liquidity and driving selling pressure across risk assets, including stocks and crypto. The analyst expects BTC to pump toward the 68,000-70,000 range before a larger move lower, with a potential local high at 70,000-72,000.