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Highlights
- Bank of Japan Governor Kazuo Ueda affirms rate hike in the coming months.
- Pacific Investment Management expected a rate hike in January.
- Bitcoin price and crypto market may crash, but the impact will be limited.
Bank of Japan (BOJ) Governor said the central bank will raise interest rates further if the economy and prices perform as expected. Japanese yen rose toward 146 against the US dollar, rebounding from two-week lows amid a hawkish outlook on Bank of Japan monetary policy. Is another Bitcoin price crash like Black Monday imminent as Japanese yen carry trades rose?
Bank of Japan Gov Reiterates Interest Rates Hike
Bank of Japan Governor Kazuo Ueda in a document submitted to a government panel chaired by outgoing Prime Minister Fumio Kishida reiterated further rate hikes, Bloomberg reported on September 3.
The recent affirmation reminded investors that despite the market meltdown triggered by the BOJ’s July rate hike, the central bank will raise borrowing costs provided the bank’s forecasts materialize. Japanese yen rose over 146 against the US dollar today after the remark.
Two-thirds of economists surveyed pointed to a rate hike again by the BOJ by the end of the year. Notably, 41% of respondents expect December as the most likely timing. On the contrary, Pacific Investment Management expected a rate hike in January.
Japan’s 10-year government bond yield climbed above 0.92%, hitting a four-week high on hawkish outlook by Bank of Japan.
Can Bitcoin Price and Crypto Market Crash?
As CoinGape earlier reported, Japan’s biggest brokerage firm Nomura Holdings confirmed that Japanese yen carry trades that crashed markets were making a comeback. Should the interest rate differences between the US Fed and Bank of Japan remain elevated, more investors will enter Yen carry trades. This risks another Black Monday-type Bitcoin price crash, triggering sell-offs in the broader crypto market.
However, US Fed Chair Jerome Powell hinted at Fed rate cuts starting in September. According to CME FedWatch data, there’s a 67% odds of a 25 bps rate cut in September, with markets still expecting 100 bps rate cuts this year. This would prevent a market meltdown as the differential will narrow.
BTC price struggles to break above $60,000 amid market uncertainty. BTC has pared today’s gains, falling to the intraday low of $57,568. Furthermore, the trading volume has decreased by 10% in the last 24 hours, indicating a decline in interest among traders.
Meanwhile, total BTC futures open interest saw a 1% increase in the last 24 hours. While the buying on CME remains dull, futures demand on exchanges like Binance, Bybit, and OKX remains intact. This indicates derivatives traders are still buying while remaining cautious due to uncertainty in the market.
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