In a key macroeconomic decision, the Bank of Japan (BOJ) opted to keep its interest rates unchanged at 0.25%, sparking a surge in the Nikkei index, which climbed by 2.10%. The move has also had a positive ripple effect on cryptocurrency markets, as Bitcoin and altcoins like Ethereum experienced significant gains, with Bitcoin rising 3% and altcoins surging between 4-10%.
BOJ’s Stance on Future Rate Hikes
While the BOJ maintained its current interest rate, it signaled potential future rate hikes if inflation continues on track to hit the 2% target. Governor Kazuo Ueda and the central bank have expressed optimism about Japan’s economic recovery, citing solid trends in private consumption despite rising prices.
“Private consumption has been on a moderate increasing trend,” the BOJ noted in its latest policy update. This assessment, along with rising core consumer inflation—which hit 2.8% in August—paves the way for potential rate hikes in the coming months, with many economists forecasting a move as early as December.
Bitcoin and Altcoin Rally
The steady interest rates in Japan have eased fears surrounding the unwinding of the Yen carry trade, benefitting risk-on assets like cryptocurrencies. Bitcoin rallied 3%, approaching the $64,000 mark, while altcoins, led by Ethereum, posted gains of 4-10%.
This recovery in crypto markets follows the U.S. Federal Reserve’s rate cuts earlier in the week, marking the first such cut in nearly four years. Notably, the rise in cryptocurrency prices has occurred with relatively low levels of market hype, indicating that the recovery is being driven by healthy market fundamentals rather than speculative frenzy.
Ethereum’s Potential for Further Gains
Ethereum, which also saw strong gains, is showing signs of a continued upward trend on technical charts, despite recent movements by co-founder Vitalik Buterin’s address. Analysts suggest Ethereum could rally further, with the potential to reach $5,000 if market conditions remain favorable.
As the BOJ prepares for potential rate hikes later this year, global markets—including cryptocurrencies—are likely to remain sensitive to future monetary policy shifts, especially in light of ongoing global economic uncertainty. For now, the crypto market appears to be enjoying the bullish momentum.
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