This morning, the Bank of Japan (BoJ) decided to keep its interest rates steady at 0.25%. This comes on the heels of news that inflation in Japan rose by 2.8% in August, compared to the same period last year. So, how does this affect Bitcoin?
A Predictable Move
The decision didn’t really come as a surprise. Many expected the BoJ to hold off on further rate hikes, especially with concerns that rising inflation could hurt consumers’ wallets. The BoJ wants to tread carefully here. While they need some inflation to stimulate market demand, raising interest rates too quickly could slow down economic growth. That would likely have ripple effects on financial markets, including Bitcoin.
If you remember, the BoJ raised rates to 0.25% back in August, and we saw some price swings in the stock and crypto markets, with Bitcoin taking a nosedive to below $50,000. Right now, the bank wants to see how that last rate hike plays out before making any more moves. Sudden changes can shake up the markets, and they’re trying to avoid that.
Japan’s Approach vs. the U.S.
What makes Japan’s stance interesting is how it contrasts with the U.S. Federal Reserve (Fed). On Wednesday, the Fed actually lowered interest rates by 50 basis points, making it the first rate cut since the pandemic began. As a result, markets reacted pretty positively. U.S. stocks rallied, and Bitcoin followed along.
Bitcoin, in particular, jumped to nearly $63,700 at the time of writing, reflecting a solid 2.7% increase. While this was happening, stock markets also experienced pretty good gains.
What Can We Expect Next?
Right now, Bitcoin has kept its momentum following the Fed’s move, with the uptrend already ongoing for more than a week. As Japan holds steady, it will be interesting to see how the rate decisions will play out. For now, keeping an eye on inflation and central bank moves can help us understand what might be next for Bitcoin’s price. Analysts are pointing to the $65,000 price level. When that breaks, a further upwards move is expected.
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