Crypto Markets Today: Bitcoin gains as Japan tightens policy and futures traders step in

Bitcoin climbed to $88,000 on Friday following the Bank of Japan’s decision to raise interest rates to their highest level in 30 years—a move that failed to trigger the expected risk-off reaction or push investors toward the yen.

Crypto markets remained volatile, with bitcoin rebounding from an early low near $85,200 around 1:00 a.m. UTC to $88,000 over the next five hours. This marked the fourth time this week that bitcoin gained more than 2%, though each rally has been short-lived, reflecting the choppy price behavior seen in previous crypto bear markets.

Traditional markets showed little disruption. Nasdaq 100 futures rose 0.62% during the same period, while the yen weakened, indicating that the rate hike was largely priced in and investors were not moving out of risk assets.

Typically, a BOJ rate hike is viewed as bearish for risk assets, as higher Japanese borrowing costs can lead to the unwinding of carry trades, where investors borrow low-cost yen to invest in higher-yielding assets such as U.S. stocks, bonds, and crypto. That dynamic, however, did not materialize Friday.

Derivatives activity

Bitcoin’s derivatives market suggested the rally was driven by fresh leveraged long positions rather than short-covering. Open interest rose faster than price, while the aggregate funding rate across exchanges climbed to 0.085%, the highest since Nov. 21, according to Coinalyze. Positive funding rates typically indicate bullish sentiment, as traders holding long positions pay interest to those holding shorts. Bitcoin’s long-to-short ratio also skewed bullish, with 66% of traders positioned long over the past four hours.

In contrast, altcoin derivatives showed weaker activity. Open interest in Solana and XRP fell 4.4% and 2.6%, respectively, despite price changes of less than 1%, suggesting traders are reducing exposure to riskier tokens. Cardano’s privacy token NIGHT maintained a deeply negative funding rate of -0.1987%, highlighting a strong bias toward short positions.

Altcoin performance

Altcoins broadly lagged behind bitcoin, with CoinMarketCap’s “altcoin season” index sliding to a new cycle low of 14 out of 100. Ether stood out, rising 1.5% against BTC between 2:50 a.m. and 10:30 a.m. UTC, although the ETH/BTC pair had been trending lower earlier in the week.

Bitcoin’s choppy performance weighed on other altcoins as well, with RNDR, IMX, WLFI, and ATOM all declining in recent hours. Analysts say altcoins are likely to regain momentum only if bitcoin breaks above key resistance levels and consolidates, allowing capital to rotate from BTC gains into more speculative bets.

Muted speculative activity is also reflected in CoinDesk’s memecoin index, which rose 2.42% since midnight UTC, compared with a 3.68% gain in the broader CoinDesk 20 index over the same period.