Synopsis: Even Japan’s $135 billion stimulus can’t stop Bitcoin’s sharp fall, as global risk-off sentiment, fading Fed rate cut hopes, and large sell-offs deepen its decline below $85,000.
Japan’s new Prime Minister Sanae Takaichi has approved a massive $135 billion stimulus package to ease inflation pain for businesses and households. Still, Bitcoin continues its sell-off, dipping below $85,500.
Takaichi’s cabinet greenlit a ¥21.3 trillion (about $135.4 billion) stimulus, the largest since the COVID pandemic. The package includes ¥17.7 trillion in general spending and ¥2.7 trillion in tax cuts. This fiscal boost aims to lighten the inflation burden by subsidizing rising energy bills and offering cash handouts to families. Notably, this approach bucks traditional views that stimulus worsens inflation.
Spending breakdown shows ¥11.7 trillion directed at price relief, including subsidies for gas and electricity and a ¥20,000 cash payout per child. Another ¥1.7 trillion strengthens defense and technology investments, underlining Takaichi’s focus on national security.
Economic Context and Market Reaction
Japan faces economic headwinds, with Q3 GDP contracting and inflation above the Bank of Japan’s 2% target for 43 months. While the stimulus may stabilize consumer confidence, it risks increasing national debt, now about three times the economy’s size. The yen weakened to a 10-month low against the dollar, and long-term government bond yields climbed to record highs, reflecting market concerns over fiscal strain.
Despite criticism that this provides only temporary relief without supply-side reforms, public polls show strong support for Takaichi and hope in her economic package.
Bitcoin’s Persistent Decline
As Japan pushes fiscal stimulus, Bitcoin continues a sharp decline from its October peak of $126,000. On November 21, Bitcoin fell to around $85,200, marking a drop of over 30% since the high. This dip has wiped out gains made earlier this year.
The sell-off is driven by risk-off sentiment, fading hopes for a U.S. Federal Reserve rate cut, and large institutional sell-offs. U.S. Bitcoin ETFs experienced massive redemptions, reflecting reduced investor appetite. Analysts highlight that Bitcoin’s volatility is heightened amid global market uncertainty.
Opportunities and Outlook
While Bitcoin’s fall worries some investors, others see buying opportunities amid the dip, as on-chain data shows institutional accumulation despite retail panic. Analysts remain cautiously optimistic, suggesting potential recovery to $112,000–$116,000 by month-end if support levels hold, with long-term targets near $200,000 by year-end.
In Japan, the stimulus package signals bold fiscal activism. Yet, it also raises concerns about long-term debt and inflation. For Bitcoin holders and investors alike, market fluctuations highlight ongoing vulnerability but also potential for gains amid volatility.
This week’s economic moves remind us that even major fiscal policies and global cryptocurrencies dance to the unpredictable rhythm of markets. Both Japan’s robust stimulus and Bitcoin’s dip will shape next months’ financial landscape. Staying informed and cautious is wiser than ever.
Written By Fazal Ul Vahab C H