You remember last week’s crash. Bitcoin and cryptocurrencies experienced a sharp decline following the Bank of Japan’s decision to raise interest rates. Not only cryptocurrencies, but stock markets also saw significant drops. Approximately 500 billion dollars were wiped off the total value of the cryptocurrency market. Now, everyone is wondering whether the Bank of Japan will make another interest rate move.
Yen’s Strengthening Affected Risky Assets
The Bank of Japan executed the most significant interest rate hike in recent years. Raising the rate from zero to 0.25%, the bank shook global markets with this move. However, this sudden change led to sharp declines in risky assets like Bitcoin.
The appreciation of the yen discouraged investors from engaging in “risky” carry trades. This situation caused Bitcoin to drop from $65,000 to $50,000 levels. The turmoil in the markets also forced other officials of the Bank of Japan to be cautious.
Uncertainty Surrounds Further Interest Rate Hikes
Former board member of the Bank of Japan, Makoto Sakurai, stated that another interest rate hike this year is unlikely. Whether there will be an increase by March 2025 remains uncertain. The transition from an ultra-loose monetary policy to a more balanced expansion policy is being closely monitored.
Deputy Governor of the Bank of Japan, Shinichi Uchida, emphasized that market stability is currently the top priority. Sakurai noted that Uchida’s statement was appropriate and that the bank is determined to ensure stability. He pointed out that communication gaps regarding interest rate hikes are the bank’s biggest issue.
Bank of Japan’s Approach Indicates a Balanced Stance
The Bank of Japan’s cautious stance is being closely watched in global markets. Particularly, the effects on Bitcoin and other cryptocurrencies are being carefully observed by investors. The bank’s new moves will continue to shape market movements.
A new interest rate hike could negatively impact Bitcoin and cryptocurrencies, potentially leading to sharp declines again.
