Japan's Bank of Japan (BOJ) is set to raise its benchmark interest rate to 0.75% in December 2025, marking the end of three decades of ultra-low rates. This move is expected to increase borrowing costs and unwind yen carry trades that have bolstered Bitcoin investments. The yen's strengthening could exert downward pressure on Bitcoin prices, which recently fell to $86,000 before rebounding. Additionally, Japan plans to introduce a 20% flat tax on cryptocurrency trading gains starting in 2026. This reform will replace the current progressive tax system, which can exceed 55%, aiming to simplify taxation and encourage domestic crypto market participation by aligning it with traditional asset taxation like equities.