tl;dr
Bank of Japan Governor Kazuo Ueda has signaled a rate hike in the coming months, leading to concerns about a potential crash in Bitcoin price and the broader crypto market. The affirmation of further rate hikes by the central bank has caused the Japanese yen to rise against the US dollar, with expec...
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Bank of Japan Governor Kazuo Ueda has signaled a rate hike in the coming months, leading to concerns about a potential crash in Bitcoin price and the broader crypto market. The affirmation of further rate hikes by the central bank has caused the Japanese yen to rise against the US dollar, with expectations of a rate hike by the end of the year. This news has raised fears of another Black Monday-type Bitcoin price crash, particularly if interest rate differences between the US Federal Reserve and the Bank of Japan remain elevated.
However, there are also indications of potential Fed rate cuts, which could prevent a market meltdown. As a result, Bitcoin price struggles to break above $60,000 amid market uncertainty, with a decrease in trading volume and cautious derivatives trading.
Bank of Japan (BOJ) Governor Kazuo Ueda affirmed the potential rate hike, stating that the central bank will raise interest rates further if the economy and prices perform as expected. The affirmation reminded investors that despite the market meltdown triggered by the BOJ’s July rate hike, the central bank will raise borrowing costs provided the bank’s forecasts materialize. Japanese yen rose over 146 against the US dollar today after the remark. Two-thirds of economists surveyed pointed to a rate hike again by the BOJ by the end of the year.
Concerns have arisen regarding the potential crash of Bitcoin price and the broader crypto market due to rising Japanese yen carry trades. There are worries that if interest rate differences between the US Fed and Bank of Japan remain elevated, more investors will enter Yen carry trades, risking another Black Monday-type Bitcoin price crash and triggering sell-offs in the broader crypto market. Despite this, US Fed Chair Jerome Powell hinted at Fed rate cuts starting in September, with markets still expecting 100 bps rate cuts this year, which could prevent a market meltdown as the interest rate differential narrows.
The market reflects this uncertainty, as Bitcoin struggles to break above $60,000, experiencing a decrease in trading volume and cautious derivatives trading. While the buying on CME remains dull, futures demand on exchanges like Binance, Bybit, and OKX remains intact, indicating derivatives traders are still buying while remaining cautious due to uncertainty in the market.
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