Japan raises base rate to 0.75% and crypto market enters cautious mode

After 11 months without movement, the Bank of Japan surprised the market by raising its benchmark interest rate to 0.75% on December 19, 2025. The result reaches the highest level recorded in the last three decades, signaling a potential sequence of tightening if economic indicators maintain the current trajectory.

The decision was in line with analysts' expectations but brought a dose of uncertainty to the crypto markets. The move reflects the central bank's strategy to combat inflationary pressures and rebalance the economy. With this change, traders have started to monitor the performance of altcoins more closely, which often react sensitively to changes in global monetary policy.

Investor sentiment remains divided. The fear and greed index reflects this duality: while some see the higher rate scenario as an opportunity, others adopt a defensive stance. The combination of caution among major players and capital reallocation creates a volatile environment where each statement from central banks carries additional weight.

In practice, the 0.75% increase has cascading impacts. Economies more attractive in traditional currencies may divert investment flows from alternative assets. Simultaneously, signals of continued monetary adjustments keep alive the possibility of further tightening, fueling uncertainty and restraining more aggressive moves in the cryptocurrency market.