Bitcoin Drops Below $86,000 Amid Japan Rate Hike Speculation

Bitcoin (BTC) dropped 4%, falling below $86,000 amid speculation about the Bank of Japan’s (BOJ) interest rate decision.

A poll showed 90% of economists predict BOJ will raise short-term rates from 0.50% to 0.75%.
Historically, Bitcoin has fallen significantly after BOJ rate hikes: March 2024 (-23%), July 2024 (-26%), January this year (-31%).
If BTC drops another 20%, it could reach $68,800, widening the gap from its all-time high ($126,000) by 46%.
Japan's impact on Bitcoin is significant due to its large US debt holdings; rising Japanese rates reduce dollar liquidity and lead to selling riskier assets like Bitcoin.
On November 30, news of a rate hike caused Bitcoin to dip to around $83,000, wiping out about $200 billion from the cryptocurrency market.

Bitcoin

China’s Mining Crackdown Effects

China intensified regulations in December, shutting down many mining operations in Xinjiang, affecting roughly 400,000 miners.
The Bitcoin network hashrate decreased by 8%, reducing miner contributions.
Miners may need to sell BTC to cover costs, creating selling pressure and contributing to price declines.

This situation is seen as a temporary supply shock due to regulatory actions rather than a long-term bearish trend. Historically, similar actions have led to temporary fluctuations before recovery.