Bitcoin Price Analysis: BTC Could Rebound to $90k Despite BOJ Interest Rate Hike Fears

Highlights:

• Bitcoin has formed strong support at $85,695 after an intraday correction
• Correction triggered by fears that BOJ could hike rates
• Support at $85,695 means the market may have priced in the news 

Bitcoin (BTC), like the rest of the market, is in the red today. At the time of writing, Bitcoin was down by 3.22% to trade at $86,869.99. A sharp rise has also followed the correction in trading volumes. When writing, Bitcoin trading volumes stood at $46.46 billion, up by 49.58%. 

Such a surge in trading volumes at a time when the price is in decline could be an indicator that holders may be selling off their BTC in anticipation of more selloffs in the short term. However, on the positive side, it could mean buyers are taking advantage of the correction below $90k to load up on Bitcoin. Both sides of the trade have logical reasons that support them, both with a short-term and a long-term view. 

BTC Drops Amid Possible Japan Rate Hikes

Short-term investors may be exiting their Bitcoin positions out of fears related to Japan. There are concerns that the Bank of Japan is looking to hike interest rates. Such a move has in the past triggered a selloff of risk-on assets, and that includes cryptocurrencies like Bitcoin. That’s because for a long time, rates in Japan remained at zero or near zero. This led to the development of what is called the Yen carry trade.

The whole essence of the Yen carry is that investors borrow Japanese Yen at almost zero interest rates to invest in high-risk assets. This created a situation where any time the Bank of Japan announces a rate hike, risk-on assets sell off while the Japanese Yen rallies.

In this case, the risk of the Yen Carry trade unwinding has triggered a Bitcoin selloff below $90k. If it is confirmed that Japan could hike rates, then Bitcoin could fall even further, potentially dropping to prices under $80k.

BTC Weakness Despite US Rate Cut Adding to Weakness

Such a selloff would be accelerated by the fact that the recent US interest rate cuts have not done anything to change Bitcoin’s fortunes. There was a lot of expectation that the December 10 rate cut could trigger a new bull rally for cryptocurrencies. However, the market reaction has been timid at best. At the same time, the Federal Reserve has indicated that there may be no more rate cuts in 2026.

The result is that there is nothing more that investors expect to trigger FOMO into Bitcoin going into 2026. As such, capital may be leaving BTC and flowing into assets that offer a higher potential for gains going into 2026 and beyond. Risk-off assets such as Gold are already showing significant strength, a hint of where capital is moving. 

Long-Term Investors Still Accumulating Bitcoin

However, taking a long-term view, there are investors still buying Bitcoin. Strategy is one such investor. The company continues to expand its  BTC position. This is a significant move long-term, given that Bitcoin is scarce and such big players can move the price. This could give Bitcoin a price floor that could send its price to new highs in the short to medium term. It is a key factor that could see retail buyers start coming in and push Bitcoin back above $90k in the short term.

Technical Analysis – BTC Finds Support After Intraday Correction

After a sustained correction for the last 24 hours, Bitcoin found strong support at $85,695. It is now bouncing off it, though the price action is weak. In the event that bulls sustain momentum, Bitcoin could rally to $89,896 in the short term. 

On the other hand, if BTC bears regain control and push the price through the $85,695 support, then a correction to prices below $80k could follow. Of these two scenarios, a rebound to $89,896 is more likely. That’s because the market appears to have absorbed the risk of a Japanese rate hike, as seen by the solid support formed at $89,896.