5 Reasons Q1 2026 Could Spark the Biggest Crypto Bull Run Yet

Memecoins are not dead because the market is down and the narrative has faded, according to president of payment infrastructure company MoonPay, Keith A. Grossman, who said that memecoins will be back but in a different form.

The real innovation of memecoins is that attention can be tokenized easily and at low costs through blockchain technology, democratizing access to the attention economy, Grossman said. He continued:

Markets are bracing for a potentially pivotal week for Bitcoin as the Bank of Japan (BOJ) heads into its December 18–19 policy meeting. Expectations point to a near-certain rate hike.

Prediction markets and macro analysts alike are converging on the same conclusion: Japan is poised to raise rates by 25 basis points. Such a move could reverberate far beyond its domestic bond market and into global risk assets, especially Bitcoin.

Bank of Japan Rate Hike Puts Bitcoin’s Liquidity Sensitivity Back in Focus

Polymarket is currently assigning a 98% probability of a BOJ hike, with a measly 2% wagering that policymakers will hold interest rates steady.

The general sentiment among crypto analysts is that this is not good for Bitcoin, with the pioneer crypto already trading below the $90,000 psychological level.

If implemented, the move would take Japan’s policy rate to 75 basis points, a level not seen in nearly two decades. While modest by global standards, the shift is significant because Japan has long been the world’s primary source of inexpensive leverage.

For decades, institutions borrowed yen at ultra-low rates and deployed that capital into global equities, bonds, and crypto, a strategy known as the yen carry trade. That trade is now under threat.

If yields continue to climb, leveraged positions funded in yen may be unwound, forcing investors to sell risk assets to repay debt.

Liquidity Fears Grow Amid Bitcoin’s BOJ Track Record

The historical backdrop is fueling anxiety in crypto markets. Bitcoin is currently trading at $88,956, down 1.16% in the last 24 hours.

However, traders are focused less on the current price and more on what has happened after previous BOJ hikes.

• In March 2024, the price of Bitcoin fell by roughly 23%.
• In July 2024, it dropped around 25%.
• Following the January 2025 hike, BTC slid more than 30%.

Against this backdrop, several traders see a troubling pattern, urging investors to brace for volatility this week.

This week, therefore, analysts see the Bank of Japan as the biggest threat to the Bitcoin price, with a play to $70,000 now in the cards.

Similar projections have been echoed across crypto-focused accounts, with repeated references to a potential drop below $70,000 if history rhymes. Such a move would constitute a 20% drop below current levels.

Regime Shift or Liquidity Shock? Why Traders Are Split on the BOJ–Fed Policy Mix

Yet not everyone agrees that a BOJ hike spells inevitable downside. A competing macro narrative argues that Japan’s tightening, when paired with US Federal Reserve rate cuts, could ultimately be bullish for the crypto market.

Macro analyst Quantum Ascend framed the situation as a regime shift rather than a liquidity shock.

According to this view, Fed cuts would inject dollar liquidity and weaken the USD, while gradual BOJ hikes would strengthen the yen without meaningfully destroying global liquidity.

The result, Quantum Ascend argues, is capital rotation into risk assets with asymmetric upside, crypto’s “sweet spot.”

Still, near-term conditions remain fragile. The Great Martis cautioned that bond markets are already forcing the BOJ’s hand.

The analyst also pointed to broadening tops in major stock indices and globally rising yields as signs of mounting stress.

Meanwhile, Bitcoin’s price action reflects the uncertainty. The pioneer crypto’s price has been largely flat through December, marking what analysts call a very choppy period into the end of the year.

Specifically, analyst Daan Crypto Trades cites low liquidity and limited conviction ahead of year-end holidays.

With equities flashing topping signals, yields breaking higher, and Bitcoin historically sensitive to Japan-driven liquidity shifts, the BOJ’s decision is shaping up to be one of the most consequential macro catalysts of the year.

Whether it triggers another sharp drawdown or sets the stage for a post-volatility crypto rally may depend less on the hike itself and more on how global liquidity responds in the weeks that follow.

Bitcoin price is trading below $90,000 and has now slipped under $89,000, changing hands near $88,794, down 1.46% in the last 24 hours.

One of the reasons behind today’s drop is growing concern over a possible interest rate hike by the Bank of Japan (BoJ).

Although no official rate increase has been announced, traders are reacting to historical patterns. Data shared by market analysts shows that Bitcoin fell between 23% and 31% after previous BoJ rate hikes.

Japan is the largest foreign holder of U.S. government debt. A tighter BoJ policy could force global investors to reduce risk exposure, which often impacts assets like Bitcoin.

Options Selling Caps Bitcoin’s Upside

Bitwise Alpha head Jeff Park said Bitcoin’s upside remains limited due to continued selling pressure from long-term holders, often called OG Bitcoin holders.

According to Park, these holders are actively selling call options, which suppresses price movement and keeps volatility low.

“ETFs are buying spot Bitcoin and call options, but demand is still not strong enough to offset the steady options selling by long-term holders,” he said.

Volatility Drops Sharply

Bitcoin’s implied volatility has fallen sharply in recent weeks. After reaching about 63% in late November, volatility has now dropped to around 44%.

Low volatility often leads to sideways price action and limits sharp upward moves. Analysts say Bitcoin needs sustained higher volatility to break out of its current range.

ETFs and Bitcoin Show Different Market Behavior

Another trend emerging in the market is the growing difference between Bitcoin ETF options and native Bitcoin options.

Options tied to the iShares Bitcoin Trust (IBIT) show strong demand for upside exposure, meaning investors are willing to pay more for bullish bets. In contrast, Bitcoin options on crypto platforms still show weaker demand for upside moves.

This difference suggests traditional investors are positioning for higher prices, while crypto-native holders continue to sell into rallies.

Long-Term Holders Continue to Supply the Market

Many early Bitcoin holders are using a covered call strategy, selling options against Bitcoin they already own.

This adds steady selling pressure and encourages market makers to hedge in a way that keeps prices moving within a narrow range. As a result, Bitcoin remains stuck in a high-supply, low-volatility environment.

What Could Change Bitcoin’s Trend

Jeff Park said Bitcoin could see stronger price action if one of two things happens: 

• A slowdown in options selling by long-term holders
• A sharp increase in demand for Bitcoin ETF options

Until then, Bitcoin may continue to struggle despite strong interest in ETFs and broader adoption.

For now, Bitcoin remains under pressure as macro uncertainty and market structure continue to limit upside momentum.