Bitcoin Sets Eyes on $88,000 Amid Japan’s Interest Rate Hike
Bitcoin, the world’s leading cryptocurrency, ventured towards $88,000 on Friday. This happened concurrent with the Bank of Japan’s decision to increase its interest rates to the highest value in 30 years. Several notable factors have shaped the financial landscape around these events.
Bitcoin Mirrors U.S Stocks Futures
Bitcoin mirrored U.S stocks futures in an unexpectedly bullish response to Japan’s interest-rate hike. While one might imagine rate hikes to be a damper for crypto and risk assets, the response has been relatively optimistic.
Observers have suggested that this hike will actually contribute favourably to asset holders. Arthur Hayes, the former CEO of leading crypto exchange BitMEX, advised followers not to “fight the BOJ,” indicating the Bank’s policy of negative real rates.
No Further Hikes Expected
Despite the hike, experts predict no further hikes due to various economic forces at play. Research project Temple 8 Research has noted a simmering difference of opinion between market expectations and Japan’s economic reality. Accordingly, they have suggested a ‘political ceiling’ is in effect and that interest rates will not see another increase until 2027 at the earliest. This cautionary approach is designed to protect the yen and sidestep elevated interest payments on Japan’s recent $140 billion stimulus package.
A significant comment from the Temple 8 blog post postulates that “You cannot floor the gas (Fiscal Stimulus) while slamming the brakes (Rate Hikes).”
Markets Remain optimistic Despite Volatility
Bitcoin, along with U.S stocks futures, was heading higher before Wall Street kicked off on Friday. By the end of the first week, Nasdaq 100 futures had seen an increase of 1.5%.
Despite caution being the anthem among traders, Bitcoin seems determined to reshape the narrative. Amid volatility sparked by unexpected U.S inflation data, the cryptocurrency hit a low of $84,390. However, signs of a downward pattern were compensated with calls for heightened support retests across social media platforms.
On-chain analytics platform, Checkonchain, conveyed caution, noting that Bitcoin was still navigating its way around the bottom, and the process was far from over. There is a firm belief that $81,000, the cost basis for U.S. spot Bitcoin exchange-traded funds (ETFs), is the key deciding value to watch.
The market is yet to bear witness to a true capitulation event, indicative of an imminent downward trajectory. Nevertheless, as the critical last few weeks of the year approach, it’s important to remember that the only predictable thing about these markets is their unpredictability.
Investment Disclaimer
This piece does not intend to provide investment advice or recommendations. All investment and trading activity involves an element of risk, and prospective investors should conduct thorough research before making a decision. While all effort is made to provide precise and up-to-date information, there is no assurance of the accuracy, completeness, or reliability of any information in this piece. This article may contain forward-looking statements that are linked with risks and uncertainties. Liability for loss or damage resulting from reliance on the information in this piece is not the responsibility of the author or the publisher.
