Ethereum falls 4% to $1,620 as Japan rate hike pressures risk assets

Ethereum fell 4% to $1,620 during the Asian session after the Bank of Japan raised its benchmark interest rate to 1%, the highest level since 1995, tightening financial conditions for risk assets globally.

"The BOJ's hawkish pivot removes a key source of global liquidity that has supported crypto valuations," said a derivatives strategist at a major crypto exchange. "ETH is particularly exposed given its high correlation with macro risk appetite."

The 25-basis-point hike, announced at 3:19 UTC on June 16, pushed Japan's policy rate to 1% from 0.75%. Ethereum's decline outpaced bitcoin, which rose 0.6% to $66,000 as traders focused on the BOJ's dovish bond-purchase pause. ETH has now lost 65% from its August 2025 all-time high of $4,946.

The sell-off has formed a bear flag pattern on the daily chart, with a measured-move target near $1,300 — a level not seen since November 2024. A break below $1,600 would confirm the pattern, while a recovery above $1,680 is needed to invalidate the bearish setup.

The divergence between bitcoin and ethereum after the BOJ decision highlights a structural shift in how crypto assets respond to macro shocks. Bitcoin benefited from the BOJ's decision to pause its bond taper, fixing monthly JGB purchases at around 2 trillion yen, which capped long-term yields and supported risk assets. Ethereum, by contrast, faced selling pressure from leveraged positions, with open interest in ETH futures on Binance hitting a record high in ETH terms just days before the sell-off, according to CryptoQuant data.

$1,300 Level in Focus

The bear flag pattern that emerged on ETH's daily chart targets a decline to $1,300 if the $1,600 support level breaks. The pattern formed after a sharp rebound from the $1,550 area earlier this month, with lower highs and parallel trend lines that suggest consolidation before a potential breakdown. The daily RSI sits at 30, firmly in bearish territory, with no divergence indicating a reversal.

On-chain data shows Ethereum non-empty wallets have reached nearly 195 million, up 230% from bitcoin's 59 million, according to Santiment. While this suggests growing network adoption, it has not translated into price support during the current macro-driven sell-off.

The next test for ETH is the $1,680 resistance level. A clean break above that mark could flip the technical outlook bullish and trigger short covering. Without it, the path of least resistance remains lower, with $1,300 as the next major downside target.

This article is for informational purposes only and does not constitute investment advice.