Makoto Sakurai, a former board member of the Bank of Japan, says the central bank could hike rates twice more by March 2027, pushing the policy rate to roughly 2% by the end of Governor Kazuo Ueda’s term in early 2028. For anyone holding risk assets, and especially crypto, that trajectory matters a lot.

The BOJ just raised its short-term interest rate by 25 basis points to 1% on June 16, the highest level since 1995. That alone is remarkable for a central bank that maintained negative interest rates for 17 years before finally abandoning them in March 2024.

Japan’s slow-motion policy reversal is speeding up

The June rate hike was the first increase since December 2025, and internal discussions at the BOJ suggest some board members are pushing for an even faster pace of tightening. A summary from the BOJ’s meeting on June 24 revealed active debate among policymakers about accelerating rate hikes, citing strong underlying inflation pressures and financial conditions that remain accommodative.

Energy costs linked to geopolitical tensions in the Middle East are adding fuel to the fire, making it harder for policymakers to justify patience.

Sakurai’s forecast of two more hikes by March 2027 would bring the rate to approximately 1.5%, with 2% on the horizon by 2028. Sakurai specifically mentioned the possibility of surpassing 2%, a scenario that would have been unthinkable just two years ago.

Why Bitcoin keeps flinching when Tokyo moves

Every major BOJ rate hike since March 2024 has been followed by a Bitcoin correction. The average drawdown has been around 27%, with individual episodes ranging from 18% to 32%.

The mechanism isn’t mysterious. Japan has been the world’s premier source of cheap money for years. Traders borrow yen at rock-bottom rates, convert to dollars or other currencies, and park the proceeds in higher-yielding assets. When the BOJ raises rates, borrowing yen gets more expensive, the yen strengthens, and those carry trades become less profitable or outright painful to maintain. Capital flows reverse. Risk assets get sold.

After the June 16 rate hike, Bitcoin initially surged to approximately $66,000. Some dovish signals around the BOJ’s bond purchase program gave traders a reason to buy the news rather than sell it. But analysts have warned that this time is unlikely to be different if the tightening cycle continues.

For investors, the practical takeaway is straightforward: monitor the BOJ’s next policy meetings as closely as you’d watch the Fed. The correlation between Japanese rate decisions and Bitcoin drawdowns is too consistent to ignore. If Sakurai’s forecast proves accurate and rates reach 2% by early 2028, the 18% to 32% correction range from previous hikes offers a rough blueprint for what traders might face.