Rate hikes are typically bearish for risk assets like cryptocurrencies, especially from the BOJ, whose long era of ultra-low rates had supported global equity and bond bull markets.
The positive crypto reaction likely stemmed from a key dovish element in the announcement: the BOJ’s decision to pause its bond taper.
As InvestingLive noted, “The bond taper pause from April 2027, fixing monthly JGB purchases at around 2 trillion yen, is the complicating factor: it removes a source of upward yield pressure at the long end and could be read as a concession to government concerns about borrowing costs, raising questions about the BOJ’s operational independence even as it tightens policy rates.”
By pausing the reduction in bond purchases (or steadying the unwind), the BOJ is effectively looking to cap upward pressure in government bond yields. This may help keep long-term borrowing costs in check, supporting financial markets and providing a counterbalance to the tighter short-term policy stance.
Overall, while the headline rate hike was expected, the dovish tilt on bond purchases likely helped soothe markets and fueled the bounce in bitcoin.