Bank of Japan Rate Hold Sparks Crypto Rebound Amid Yen Carry Trade Concerns

The Bank of Japan (BOJ) kept its interest rates unchanged at 0.25%. This news eased concerns over the Yen carry trade unwinding, boosting markets and sparking a rally in cryptocurrencies. 

The Nikkei index gained 2%, Bitcoin saw a 3% rise, inching closer to $65,000, while altcoins like Ethereum gained between 4% and 10%. 

BOJ Maintains Interest Rates Amid Economic Recovery

The Bank of Japan recently clinched its interest rates steady at 0.25%, easing market concerns and boosting stock prices. Following the announcement, the Nikkei index surged by 2.10%, reflecting confidence in Japan’s ongoing economic recovery.

BOJ’s revised outlook on private consumption further strengthened this sentiment.

The central bank stated, “Private consumption has been on a moderate increasing trend despite the impact of price rises.”

This suggests the BOJ is optimistic about the economy and may consider future rate hikes if inflation remains on track to hit its 2% target. The central bank’s governor, Kazuo Ueda, has also indicated that the bank is closely monitoring global economic uncertainties.

“Looking at consumption and other data, Japan’s economy is on track and moving in line with our forecasts,” he added.

In August, core consumer inflation reached 2.8%, marking the fourth consecutive month of increase. The governor said the BOJ will continue interest rate hikes in the coming months should inflation sustain the upward trend. 

As recent reports indicate, Economists expect the rate hike to occur by December.

“The governor stressed risks surrounding the U.S. economy and re-confirmed that BOJ won’t hike rates when markets are unstable. But such risks may clear up. I believe there’s still a chance the BOJ could hike rates in December,” says economist Atsushi Takeda.

Crypto Market Surges on BOJ’s Announcement

With the Bank of Japan’s holding interest rates steady, market sentiment has turned positive, and cryptocurrencies have also benefited. 

Bitcoin saw a 3% increase, nearing $64,000, while major altcoins followed suit with impressive gains. According to the trading chart, BTC rose from $59,000 on September 19 to above $64,000 today. 

With the present bullish momentum, BTC can break above this resistance level. 

Moreover, the bullish outlook is evident in several technical indicators. For instance, the MACD is over its signal line and displaying green histogram bars. The Relative Strength Index (RSI) is currently at 64, suggesting a bullish sentiment.

If the bulls sustain this momentum, the broader crypto market will likely witness an uptrend. In the past 24 hours, Ethereum has recorded a value increase of about 4%. According to market analysts, it is now eyeing a potential rally toward $5,000.

This recovery comes on the heels of recent U.S. Federal Reserve rate cuts, the first in nearly four years. The rate cut also boosted market sentiment in digital assets.

Data from Santiment showed that Bitcoin’s recovery has been steady, without signs of extreme market hype or “fear of missing out” (FOMO). This suggests the BTC and altcoin rally is sustainable and could continue in the coming weeks.