Crypto crash prediction after BOJ rate hike: Will BOJ rate hike trigger a crypto crash? Here’s how it might impact Bitcoin price (BTC USD), Ethereum, XRP and other altcoins
Bitcoin price USD fell to $84,567 today amid BOJ interest rate hike expectations
Bitcoin was trading at 84,567 on Thursday, about 7% below this month’s high and nearly 30% below its all-time high.
Meanwhile, Polymarket gives a 99% probability of a BOJ interest rate hike, reflecting rising market expectations, according to a Crypto.News report.
BOJ’s historic interest rate hike could impact global crypto liquidity
The BOJ, one of the world’s largest central banks with more than $4.48 trillion in assets and the largest holder of U.S. government bonds, has maintained ultra-low interest rates for decades to stimulate borrowing and economic growth. But rising inflation and a weakening of the yen led the central bank to signal a 0.25 percent increase, pushing rates from 0.5 percent to 0.75 percent, the highest level in decades, according to the Coinpedia report.
BOJ’s interest rate hike may create volatility in cryptocurrency markets. Historically, crypto thrives on the liquidity provided by low borrowing costs. When central banks tighten policy, liquidity dries up, often triggering selloffs in speculative assets like Bitcoin, Ethereum, and XRP.
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Carry trades may reverse, putting pressure on BTC USD and altcoins
Investors are also watching the global carry trade closely. Japan has long been a source of cheap capital, with investors borrowing yen at low rates to invest in high-yielding assets such as U.S. stocks or crypto. A rate hike narrows the yield gap and could cause investors to unwind these trades, which could create further selling pressure in crypto markets.
Technical analysis shows Bitcoin price USD forming bearish flag pattern
Technical indicators show that Bitcoin is forming a bearish flag pattern on the daily chart. The coin is approaching the 78.6% Fibonacci retracement level, staying below the Supertrend indicator and the 100-day Exponential Moving Average.
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Bitcoin price is approaching key support near $74,423
Analysts warn that this could see Bitcoin test its year-to-date low of $74,423, around 15% below current levels, according to a Crypto.News report.
Potential recovery could cause Bitcoin to retest $94,500
Despite the bearish outlook, Bitcoin could briefly recover to retest the top of the flag around $94,500 and then potentially resume the downtrend.
Lessons from 2022 Fed rate hikes suggest caution for crypto
According to a Coinpedia report, Bitcoin prices fell from $60,000 to below $20,000 in a few months following the US Federal Reserve’s interest rate hikes in 2022, and now analysts say a similar impact could be seen if the BOJ continues with its expected interest rate hike.
FAQ
How likely is the BOJ to raise interest rates?
Polymarket shows the probability of a rate hike as 99%.
Why is BOJ rate hike important for crypto?
Higher rates reduce liquidity, which can trigger selling in crypto markets.
