Bitcoin price and crypto market risk collapsing as Bank of Japan (BOJ) governor Kazuo Ueda confirmed rate hikes in the coming months.
On Tuesday, Bank of Japan (BOJ) Governor Kazuo Ueda stated that the central bank would further increase interest rates if the economy and inflation meet expectations.
This announcement caused the Japanese yen to rise toward 146 against the US dollar, bouncing back from two-week lows, amid a more hawkish outlook on BOJ’s monetary policy.
BOJ Governor Reaffirms Interest Rate Hikes
Governor Kazuo Ueda, in a document presented to a government panel led by outgoing Prime Minister Fumio Kishida, reiterated the possibility of additional rate hikes, according to a Bloomberg report on September 3.
The recent statement reminded investors that despite the market turmoil caused by the BOJ’s rate hike in July, the central bank will continue to raise borrowing costs if its economic projections are realized.
Following these comments, the Japanese yen strengthened to over 146 against the US dollar.
Two-thirds of economists surveyed anticipate another rate hike by the BOJ by the end of the year, with 41% of respondents predicting that December is the most likely timing.
In contrast, Pacific Investment Management expects a rate hike in January. Meanwhile, Japan’s 10-year government bond yield rose above 0.92%, reaching a four-week high due to the Bank of Japan’s hawkish stance.
Could Bitcoin Prices and the Crypto Market Crash?
As previously reported by CoinGape, Japan’s largest brokerage firm, Nomura Holdings, confirmed that the yen carry trades, which previously led to market crashes, are making a comeback.
If the interest rate gap between the US and Japan remains wide, more investors may engage in yen carry trades, raising the risk of another significant Bitcoin price crash similar to “Black Monday,” which could trigger sell-offs across the broader crypto market.
However, US Federal Reserve Chair Jerome Powell has hinted at potential Fed rate cuts starting in September.
According to CME FedWatch data, there is a 67% chance of a 25 basis point rate cut in September, with markets still expecting a total of 100 basis points in rate cuts this year.
Such actions would reduce the differential and help prevent a market meltdown.
Currently, Bitcoin’s price is struggling to break above $60,000 amid ongoing market uncertainty. After today’s initial gains, Bitcoin is now trading at $59,104.
Additionally, trading volume has decreased by 20% in the last 24 hours, signaling a decline in trader interest.
