Bitcoin climbed to $88,000 on Friday after the Bank of Japan raised interest rates to their highest level in three decades, a move that failed to trigger the risk-off response many investors had anticipated or spark a rush into the yen.

Volatility remained elevated in crypto markets, with bitcoin rising from an early low near $85,200 around 1:00 a.m. UTC to $88,000 over the following five hours. The rally marked the fourth instance this week in which bitcoin has gained more than 2%, though each advance has so far proven short-lived, with price action echoing the choppy patterns typically seen during past crypto bear markets.

Traditional markets signaled little concern over the BOJ’s decision. Nasdaq 100 futures rose 0.62% over the same five-hour window, while the yen weakened, suggesting the rate hike had been largely priced in and investors were not rushing to rotate out of risk assets into Japan’s currency.

A BOJ hike is often viewed as negative for risk assets, as higher Japanese rates can make the yen more expensive to borrow and encourage the unwinding of carry trades — strategies that involve borrowing low-yielding yen to invest in higher-return assets such as U.S. bonds, equities and cryptocurrencies. That dynamic, however, did not materialize in this instance.

Derivatives positioning

Bitcoin’s derivatives market showed signs of speculative enthusiasm rather than short covering. Open interest rose faster than price on Friday morning, indicating that the move was driven primarily by leveraged long positions. The aggregate funding rate across exchanges climbed to 0.085%, its highest level since Nov. 21, according to Coinalyze, after turning negative several times over the past four weeks.

Positive funding rates typically reflect bullish sentiment, as traders holding long positions pay interest to those holding shorts. Bitcoin’s long-to-short ratio also skewed bullish, with 66% of traders positioned long over the past four hours.

Elsewhere, derivatives signals were weaker. Open interest in Solana and XRP fell 4.4% and 2.6%, respectively, despite price moves of less than 1%, suggesting futures traders are gradually reducing exposure to more speculative assets. Funding rates for Cardano’s privacy-focused token NIGHT remained deeply negative at -0.1987%, highlighting a strong bias toward short positions.

Token talk

Altcoins continued to lag the broader market, with CoinMarketCap’s “altcoin season” index sliding to fresh cycle lows at 14 out of 100. Ether stood out as an exception, outperforming bitcoin with a 1.5% gain against BTC between 2:50 a.m. and 10:30 a.m. UTC, though the ETH/BTC pair had been in a downtrend earlier in the week.

Bitcoin’s erratic price action has weighed on the wider altcoin complex, with several tokens selling off in recent hours. RNDR, IMX, WLFI and ATOM all posted declines as uncertainty persisted.

For altcoins to regain momentum, traders say bitcoin needs to break above key resistance levels and consolidate, allowing capital to rotate from bitcoin gains into higher-risk assets. The muted appetite for speculation is reflected in CoinDesk’s memecoin index, which was up 2.42% since midnight UTC, compared with a 3.68% gain in the broader CoinDesk 20 index over the same period.