The Bank of Japan sharpens its knives for interest rate hikes, and the crypto market should be wary of hawkish winds.
Just now, the Bank of Japan released hawkish signals, suggesting that the current interest rate hike cycle may be extended, with the final rate possibly exceeding 0.75%. As soon as this news came out, global market nerves tightened. In simple terms, Japan is not in a hurry to withdraw and wants to raise interest rates further, and how high it will go is still being tested. For the crypto market, this is a tangible macro disturbance.
Japan is an important source of low-interest funds globally and is known as the base for arbitrage trading. An extended interest rate hike cycle means that the cost of borrowing yen will gradually rise. Once the attractiveness of yen interest rates increases, it may lead to some global funds flowing back to Japan, pulling liquidity from the market.
Against the backdrop of the Federal Reserve pausing interest rate hikes and the European Central Bank being cautious, when the Bank of Japan issues a hawkish note, it serves as a reminder to the market: the global low-interest rate era is in full retreat. This will reinforce the market's long-term expectations of rising costs of funds and tightening liquidity, which is detrimental to high-risk assets.
The uncertainty of neutral interest rates equals sustained volatility.
The Bank of Japan itself also admits it has not yet determined the level of neutral interest rates. This means that the policy path carries uncertainty, and the market will repeatedly speculate and price, which may trigger temporary risk-averse sentiment and exacerbate global asset volatility, including cryptocurrencies.
The news itself does not directly determine the trend of the crypto market, but it will continue to exert pressure through three channels: affecting the USD/JPY exchange rate, global liquidity expectations, and risk sentiment. If subsequent U.S. economic data is also strong, and the central banks of Europe, America, and Asia form a tightening chorus, it will significantly suppress the bull market.
Pay attention to the trends of the USD index and the USD/JPY exchange rate; they are the barometers of fund flows.
Avoid high-leverage operations during periods of thin liquidity, as central bank statements can easily trigger fluctuations.
Remember: under the narrative of macro tightening, cash is also a position; maintaining liquidity is essential to seize the next opportunity.
This is not the death knell for the bull market, but it will definitely be a stress test for the resilience of positions and risk control discipline. Tap the avatar, follow Bull Brother!! Don’t miss any updates on the latest information! Let’s feast together!
