SKN | Japan Unveils $135B Stimulus Package as Bitcoin Extends Deepening Sell-Off

Tokyo Deploys Its Biggest Fiscal Bazooka Since COVID

Japanese Prime Minister Sanae Takaichi’s cabinet approved a JPY 21.3 trillion ($135.4 billion) stimulus package on Friday, marking her administration’s most aggressive economic move since taking office.

The plan includes JPY 17.7 trillion in general account spending, a sharp increase from last year’s JPY 13.9 trillion, along with JPY 2.7 trillion in tax cuts. The government says the package is designed to counter rising living costs, support small and medium-sized enterprises, and ease the strain of persistent inflation on households.

The push reflects a decisive return to expansionary fiscal policy in Japan — even as other major economies remain cautious about further stimulus. Some economists note the irony: the government is boosting spending to cool inflation, despite stimulus historically being inflationary.

Still, Takaichi has made it clear that political priority lies in protecting consumer purchasing power and stabilizing the domestic economy.

Bitcoin Extends Decline, Ignoring Another Inflationary Catalyst

Bitcoin showed little reaction to the massive fiscal stimulus, instead extending its multi-week downturn. BTC slipped 0.8% to $85,480, briefly hitting $83,300 during overnight trading.

The drop continues bitcoin’s steep retreat from its Oct. 8 all-time high of $126,000, a drawdown driven by slowing ETF inflows, rising liquidations, and fading institutional engagement.

Historically, bitcoin tends to rally when governments deploy large-scale spending or monetary support  narratives often linked to currency debasement and inflation hedging. But this time, the move failed to spark demand.

Analysts say that reflects deteriorating market structure:

• Global risk appetite has weakened amid tech-sector volatility.
• Crypto-specific liquidity has thinned significantly since mid-October.
• ETF flows have flipped negative, draining market support.

“Even inflationary catalysts aren’t enough right now,” one Asia-based digital asset strategist told SKN. “Bitcoin is trading on liquidity conditions, not long-term macro themes.”

A Market Searching for a Bottom

Japan’s stimulus comes at a time when global markets are struggling to stabilize. U.S. tech stocks have pulled back sharply, treasury volatility is rising, and crypto liquidations continue to accelerate.

Bitcoin has shed nearly $40,000 in six weeks and is testing multimonth support zones between $83,000 and $86,000. A failure here could expose deeper levels near $79,000–$81,000, traders warn.

For now, Japan’s fiscal intervention underscores the scale of global economic concern  but risk assets, including bitcoin, remain firmly in defensive mode.