A big step coming from Japan. Current forecasts indicate a huge 98.2% chance that the Bank of Japan will raise interest rates next week. This is a radical shift for a central bank that has remained extremely accommodative for years, and markets are beginning to feel its effects.
Here’s why cryptocurrency traders need to pay attention. Typically, an interest rate hike by the Bank of Japan means a decrease in global liquidity. And when liquidity decreases, risk assets are affected first, including cryptocurrencies. A decline in cheap liquidity often leads to a slowdown in cash flows, increased volatility, and short-term price pressure.
This doesn’t necessarily mean a crash, but it does mean the environment is changing. At these stages, leverage is reduced, low-risk traders panic, and strong levels on the chart begin to gain significant importance. Bitcoin and major altcoins may experience sharp price volatility, fake breakouts, and steep retracements before any clear trend forms.
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