The Bank of Japan’s decision to raise interest rates is a turning point in global monetary policy and will indirectly affect the price of Bitcoin (BTC).
Japan’s financial authorities raised short-term interest rates by 25 basis points. rose from 0.5% to 0.75%, the highest level since 1995.
Since this correction was within expectations, the market reacted noticeably calmly, allowing Bitcoin to post a 3% gain over the past 24 hours. This can be seen in the following graph.
Despite the initial stability, rising interest rates in Japan will introduce financial arbitrage mechanisms such as: «Carry Trade», As explained by CriptoNoticias.
More expensive funding conditions in Asian countries could reduce global liquidity and create selling pressure on digital assets.
However, real volatility is expected to emerge once Western stock exchanges close. Start work in the morningThis defines the direction of assets that are considered ‘risky’, such as equities, taking into account the new composition of international capital. A large decline in the capital markets could “infect” Bitcoin.
Pressure from the Bank of Japan is now being offset by US macroeconomic data, with inflation falling 40 basis points to 2.7% year-on-year, after hitting 3% in September.
This reduces the space Consumer Price Index (CPI) is at its lowest level since March 2021approaching the US Federal Reserve’s (FED) target of 2%.
Lower inflation is generally good for Bitcoin, as it weakens the dollar and increases the likelihood that monetary authorities will adopt more expansionary monetary policy and encourage investment in assets with limited supply.
