Bitcoin and Yen Hold Steady as Japan Reports Inflation Slowdown, BOJ Maintains Rates

Bitcoin (BTC) and the Japanese yen traded near unchanged on Friday following Japan's report of a 2.1% year-on-year headline inflation rate in December, down from 2.9% in November. The core inflation rate eased to 2.4%, while core-core inflation—excluding food and energy—declined slightly to 2.9%. Analysts noted persistent underlying price pressures despite the slowdown. The Bank of Japan (BOJ) kept its benchmark interest rate at 0.75% in a unanimous decision, raising growth and inflation forecasts for fiscal years 2025 and 2026. Bitcoin remained stable near $90,000, while the yen weakened by over 0.20% to 158.70 per U.S. dollar. Strategists expect the yen to remain weak, potentially weighing on Bitcoin given their strong correlation. Meanwhile, the 10-year Japanese government bond (JGB) yield rose 3 basis points to 1.12%, reflecting concerns about fiscal policy and expectations of future BOJ rate hikes. Global borrowing costs increased as yields surged to multi-decade highs, creating challenges for risk assets like stocks and Bitcoin, which had fallen over 4.5% earlier in the week before recovering slightly.