Will the Bank of Japan’s Rate Hike Trigger a Bitcoin Price Crash?

Since the rumor of the possible rate hike by the Bank of Japan started to circulate in cryptocurrency community forums, it has triggered several sensitive questions about the potential impact of this hike on the Bitcoin market – which is said to be in a crucial stage right now. Now, what we can see is the strengthening of the Japanese Yen against the US dollar. Is Bitcoin at risk? Let’s analyze the situation! 

BOJ’s Rate Hike Possibility: What We Know 

The possibility for an interest rate hike was already hinted at by Kazuo Ueda, the governor of the Bank of Japan. Many economists are of the view that the coming rate hike would be the first of a series of rate hikes the Bank of Japan is planning to execute. They are expecting a similar rate hike either at the end of this year or at the beginning of the coming year. 

How Markets React to the BOJ’s Rate Hike Possibility 

The 10-year government bond of Japan has expressed a strong positive reaction; it has climbed to a four-week high shortly after the news was publicised, showcasing clearly the level of the investor interest the news have created.    

Why This Matters for Bitcoin 

What’s bothering the Bitcoin market right now is the possibility for the return of Yen carry trades. If the interest rate difference between the US Federal Reserve and the BOJ stays large, more people will likely invest in yen carry trades. In the scenario of a sudden hike in the investors’ interest in Yen carry trades, the possibility for a Bitcoin price crash is almost certain.

Can US Fed’s Potential Rate Cuts Help Bitcoin

Recently, Jerome Powell, the US Fed Chair, announced his plan to reduce the interest rate in September, 2024. If that is implemented, it would narrow the interest rate gap. And, thus, it might save the Bitcoin market from a rough crash. 

Bitcoin Market Landscape: What’s The Current Scenario

The Bitcoin price now stays at $56,603.61. In the last 24-hours alone, it has seen a fall of 4.5%. In the last 7-days, it has displayed a dip of 4.9%. In the beginning of this month, on September 1, 2024, the price closed at $57,291. On the second day, the market witnessed a comfortable green candlestick, taking the price up to $59,138. Yesterday, sellers again took control of the market, leaving a large red candlestick, taking the price down to $57,512. Giving a hint about the strength of the downward momentum the market has experienced today, the market has recorded the month’s highest 24-hour volume of $110.101M.

In conclusion, the Bank of Japan’s possible rate hikes has the potential to encourage crypto investors to rethink their cryptocurrency investment strategy. Despite this, the crypto community are still confident about the potential of the planned September rate cuts by the US Fed to resolve this issue. 

Also Check Out: Why Crypto Market is Down Today? September Capitulation and ETF Cash Outflows