Ethereum Sells Off as Japan Hikes Interest Rates: Can ETH Price Sustain Recovery?

Ethereum’s native token, Ether (ETH), has dipped 1.94% to reach around $1,760 today as traders assess the Bank of Japan’s latest interest rate hike.

Japan Raises Interest Rates, Limiting ETH Upsides

The Bank of Japan (BoJ) hiked its key short-term policy rate by 25 basis points to 1.0% at its June 15-16 meeting.

This marks the BoJ’s first rate hike since December 2025, aligning with other major central banks, including the European Central Bank, that have shifted toward tighter monetary policy to combat inflation.

BREAKING; The Bank of Japan officially hikes interest rates to the highest level since 1995 amid rising inflation.

— The Kobeissi Letter (@KobeissiLetter) June 16, 2026

Japan has been one of the last major sources of cheap funding.

When the BoJ raises rates, even by 25 basis points, it can pressure leveraged risk trades by making yen-funded borrowing less attractive. That usually hits high-beta assets first, including ETH.

The hike itself doesn’t imply a long-term bearish trend for Ethereum and other crypto assets.

Instead, intraday traders are selling into an ongoing price rebound that has seen ETH rise by up to 22.66% in the past week, driven primarily by the preliminary truce announcement between the US and Iran.

Ethereum Technical Analysis: Bear Flag Raises Dip Risks Toward $1,300

ETH’s four-hour chart shows that bulls have regained short-term control. The price has climbed back above the 20- (green), 50- (red), and 100-period (purple) exponential moving averages (EMAs), which means buyers are defending the rebound from the $1,510 area.

As long as ETH holds above these moving averages, the next upside target sits near the 200-period EMA around $1,887. That level is important because it often acts as resistance during broader downtrends.

However, the daily chart still looks cautious. ETH appears to be moving inside a bear flag, a pattern that forms when price recovers after a sharp drop but remains trapped below key resistance.

The 20-day EMA near $1,796 is the first major test. A rejection there could keep the bearish setup alive. But a clean daily close above it could weaken the bear flag and send ETH toward the 50-day EMA near $1,961.