On Friday, Bitcoin 
$75,924 and Ethereum 
$2,406 experienced a significant rise during Asian trading, crossing critical technical levels and injecting fresh momentum into the cryptocurrency market. This upward trend was influenced by the Bank of Japan’s (BOJ) interest rate hike that the markets absorbed without distress, coupled with U.S. inflation coming in lower than expected, bolstering risk appetite. Bitcoin surged above $87,000, and Ethereum mirrored the general market strength, with numerous altcoins like ADA, SOL, DOGE, BNB, and XRP witnessing intra-day gains of up to 3%.
Macroeconomic Relief Elevates Cryptocurrencies to Key Thresholds
The BOJ raised its policy rate to a three-decade high, a decision that had been anticipated for weeks, alleviating market fears instead of inciting panic. Although Japan’s 10-year treasury yield briefly touched 2% for the first time since 2006, the yen weakened, and Asian equities gained strength. The MSCI Asia Pacific Index rose by 0.7%, with technology stocks leading the way.
The recovery in global risk appetite extended to U.S. markets, as the S&P 500 index climbed 0.8%, and the Nasdaq 100 jumped 1.5%. Micron Technology’s positive outlook eased concerns about AI spending and valuation debates. Concurrently, the lower-than-expected U.S. inflation data strengthened the belief that the Fed might start cutting rates in the upcoming months, reinforcing perceptions of a loosening in financial conditions.
Leverage Pressure Persists Amid Year-End Volatility
Before the rally, sessions were volatile yet range-bound, with CoinGlass data indicating that over $576 million was liquidated in the cryptocurrency market within the past 24 hours. A significant portion of these liquidations came from long positions. The current market scenario shows an accumulation of positions during the recent recovery, with high leverage usage aimed at small gains remaining prevalent.
On the blockchain data front, there are signs that selling pressure might ease. According to K33 Research, long-term Bitcoin investors are nearing the end of an extended selling phase, during which approximately 20% of supply has returned to the market over two years. Despite this, the recent surge driven primarily by macroeconomic relief sets the stage for potential volatility as year-end approaches, with liquidity diminishing and leverage levels remaining high.
