Bitcoin (BTC) is struggling to regain the $90,000 level ahead of a key event on the macroeconomic calendar. And this Friday, the Bank of Japan (BoJ) will announce its monetary policy decisions.
So far, the market consensus is that there has been no significant change. Interest rate will continue at 0.75%the highest level since 1995. However, investors’ interest is It is included in the message left by Kazuo Ueda.said the Bank of Japan Governor after the January 23rd meeting.
Specifically, investors are looking for signals on how Japanese companies will balance the weakening Japanese yen while avoiding the risk of putting upward pressure on bond yields. This is a scenario Where fiscal and monetary tensions are high.
At the same time, political signals such as proposals for increased spending and tax cuts are also gaining importance. Inflation is more likely to rebound This could force faster adjustments in rates.
However, economic fragility and the Bank of Japan’s historically cautious stance keep the discussion openAs a result, the market remains divided between the possibility of keeping interest rates low and the possibility of them eventually becoming more restrictive.
According to sources cited by Reuters, Some Bank of Japan officials believe there is room to bring forward interest rate hikes.. They point to April as a concrete possibility, even though the market consensus is July.
The yen has fallen about 8% since October, and the yield on 10-year Japanese government bonds has reached a level not seen in about 30 years. Both factors strengthen expectations that the Bank of Japan will: Financial adjustment may be forced to accelerateif inflation continues to gain momentum.
Bitcoin tracks the development of events
So why does what’s happening in Japan matter to Bitcoin? Now, as the situation in Japan’s economy continues to worsen, Scenarios of global uncertainty and reduced risk appetite.
As CriptoNoticias reports, a more restrictive signal from the Bank of Japan would mean a tightening of financial conditions in any of the countries that have historically maintained ultra-expansionary policies. If there are restrictions, the following scenarios are possible:
- Strong yen.
- Sovereign bond yields have recovered.
- Reduced liquidity.
all these factors Put pressure on assets considered to be at risklike BTC. Additionally, rising Japanese government bond yields reduce the relative attractiveness of Bitcoin as an alternative store of value. This is achieved by offering more competitive real returns on traditional products.
In an environment where central banks are showing signs of prioritizing financial stability over stimulus, it happens that investors tend to reduce their exposure to cryptocurrencies. This fact is one of the reasons why BTC is chosen. encounter difficulties Recover major levels such as $90,000.
At the time of publication of this note, The currency created by Satoshi Nakamoto is trading at $89,500It is 29% below its all-time high (ATH) of $126,000.
On the other hand, it must also be kept in mind that Japan holds the key to the global “carry trade” thanks to historically low interest rates. Investors have long tended to borrow in yen and invest that money in high-yield assets.
If Japanese government bond yields rise again (40-year bond yield on Tuesday was 4%), This strategy tends to reverse, which means closing positions and reducing available liquidity.
This process usually has a negative impact on risky and volatile assets such as stocks and crypto assets.
