Bitcoin is facing a potential correction towards the $70,000 mark, primarily influenced by the Bank of Japan's (BoJ) hawkish monetary policies, according to several macro analysts. Historical data suggests a correlation between BoJ's interest rate hikes and significant Bitcoin price drops.
Impact of BoJ's Monetary Policy
Data compiled by analyst AndrewBTC indicates that since 2024, each interest rate increase by the BoJ has coincided with Bitcoin price declines exceeding 20%. For instance, Bitcoin experienced drops of approximately 23% in March 2024, 26% in July 2024, and 31% in January 2025 following BoJ rate adjustments.
AndrewBTC cautions that if the BoJ proceeds with further rate hikes in its upcoming meeting, the risk of a similar price downturn for Bitcoin is substantial. A recent Reuters survey also reveals that a majority of economists anticipate the BoJ to raise interest rates during its December policy meeting.
Global Liquidity and Bitcoin's Vulnerability
Historically, BoJ's rate hikes have strengthened the Japanese Yen, increasing borrowing costs and potentially limiting the flow of capital into risk assets. This scenario often compels investors to unwind Yen-denominated "carry trades," leading to reduced liquidity in the global financial markets.
- Impact on Bitcoin: When liquidity tightens, Bitcoin becomes susceptible to downward pressure as investors proactively reduce leverage and limit exposure to riskier assets during periods of heightened risk aversion.
- Analyst Perspective: Analyst EX suggests, given the current macroeconomic conditions, Bitcoin could realistically fall below the $70,000 threshold.
Technical Analysis Points to Potential Decline
On the daily chart, Bitcoin is forming a bear flag pattern, a technical signal that suggests a continuation of the downward trend. This pattern emerges after a sharp decline from the $105,000 - $110,000 range in November, followed by a consolidation phase within a narrow, upward-sloping channel. Bear flag patterns typically signal a short pause before the downtrend resumes.
If the price breaks below the lower trendline of the flag pattern, Bitcoin could enter a new phase of decline, targeting the $70,000 - $72,500 range. Several analysts, including James Check and Sellén, have also issued similar negative forecasts recently.
| Analyst | Forecast |
|---|---|
| AndrewBTC | Potential for significant drop |
| EX | Below $70,000 |
| James Check | Negative outlook |
| Sellén | Negative outlook |
Bitcoin's $55 billion options market is primarily focused on the $100,000 mark, signalling the potential for large swings.
Despite price volatility, Google Trends data suggests that Bitcoin continues to maintain a significant level of interest.
FAQs
Why is Bitcoin potentially falling below $70,000?
Bitcoin faces downward pressure due to the Bank of Japan's hawkish monetary policies, particularly interest rate hikes. Historically, these hikes have correlated with significant Bitcoin price drops as they tighten global liquidity.
How do Bank of Japan interest rate hikes affect Bitcoin's price?
BoJ rate hikes strengthen the Yen, increasing borrowing costs and reducing capital flow into risk assets like Bitcoin. This can lead to investors reducing leverage and selling off riskier assets, causing Bitcoin's price to decline.
What technical indicators suggest Bitcoin's price could decline further?
Bitcoin is forming a bear flag pattern on the daily chart, signaling a potential continuation of the downward trend. If the price breaks below the flag's lower trendline, it could target the $70,000 - $72,500 range.
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