Will the Bank of Japan's Hawkish Pivot Trigger Bitcoin's Next Major Pullback Below $70,000?

Technical Signals Already Flashing Red

Bitcoin’s daily chart is painting a textbook bearish picture right now. The world’s largest cryptocurrency has formed a classic bear flag pattern following its sharp decline from the $105,000–$110,000 range back in November. What followed was a narrow consolidation phase with an upward-sloping bias—a setup that typically signals only a temporary breathing room before sellers regain control.

The technical projection? A decisive move below the bear flag’s support level could open the door to the $70,000–$72,500 range. Multiple analysts have converged on similar downside targets, suggesting this level isn’t just random—it’s where key technical structures align. With Bitcoin currently trading around $87.48K, that represents roughly an 18-20% descent from present levels.

Historical Pattern: BoJ Tightening = Bitcoin Weakness

Here’s where macroeconomic headwinds enter the picture. The Bank of Japan is positioned to raise interest rates this Friday (December 19), and history tells us to take this seriously if you’re holding volatile assets.

Since 2024, every single BoJ rate hike has corresponded with Bitcoin corrections exceeding 20%. The data points are stark:

• March 2024: Bitcoin declined approximately 23%
• July 2024: Bitcoin fell roughly 26%
• January 2025: Bitcoin dropped around 31%

This isn’t coincidence—it’s a mechanical relationship. When BoJ tightens monetary policy, the Japanese yen strengthens, making yen-denominated borrowing more expensive. This forces traders who’ve been financing risky asset bets through yen carry trades to unwind positions rapidly. As these trades collapse, liquidity drains from global markets, and high-risk assets like Bitcoin face sudden selling pressure.

A Reuters poll suggests market participants expect another rate increase at this month’s policy meeting, amplifying the probability of this scenario playing out.

The Liquidity Squeeze Mechanism

When capital flows contract on this scale, leverage gets wiped out and investors reduce exposure across the board. Bitcoin, being highly sensitive to liquidity conditions and risk appetite, typically bears the brunt of such shifts. Some macro-focused market observers are projecting Bitcoin could indeed “dump below $70,000” if BoJ follows through with expectations.

The combination of technical vulnerability and macro headwinds creates a particularly precarious setup. Both momentum and structural indicators are pointing toward potential downside pressure, especially if this week’s policy announcement materializes as anticipated.