Key Points
- The Bank of Japan’s interest rate hike has caused a significant shift in the global markets, including cryptocurrencies.
- Despite short-term market declines, the future trend of cryptocurrency is expected to surpass other investments.
An unexpected action by the Bank of Japan (BOJ) is leading to a significant market shift. The bearish sentiment surrounding Bitcoin is contributing to the overall decline of the crypto market, but it’s not yet the time to sell.
Cryptocurrencies are growing at a faster pace than the internet, indicating the arrival of Web 3. Unlike the internet, the value of cryptocurrencies is instantly apparent, as shown by the Crypto vs Internet Adoption Curve. As the crypto market surges, understanding its complexities will ensure you stay informed and prepared for the next significant shift.
Impact of Interest Rate Hikes on Crypto Markets
After 30 years of 0% interest, Japan’s rate hike has led investors to unwind $4 trillion in trades, affecting global markets. This move by the BOJ has caused Japanese investors, who previously used cheap bank money for global investments like crypto, to start selling assets to repay loans. This sell-off has affected global markets.
Historical context reveals similar scenarios in 2001 and 2008 leading to market downturns. While global tensions and Federal Reserve policies are factors, Japan’s interest rate hike is a significant catalyst for the recent market decline. This unexpected move led to widespread asset liquidation, creating ripple effects across international markets and contributing to the current downturn.
Bitcoin’s Market Situation
The previous two bottoms in Bitcoin’s price action formed when above-average sell-side volume occurred, indicating seller exhaustion. This pattern suggests a similar trend is needed before a price decline can occur. Bitcoin has not yet reached this level of sell-side volume, implying more selling pressure must come first.
The three tops in price action, combined with bearish sentiment, provide further insights into the anticipated sell-off for Bitcoin and other crypto assets. This bearish pattern underscores the need for increased sell-side volume before the market can see a swift price decline, confirming a deeper bearish trend.
