The Bank of Japan (BoJ) decided to keep its interest rate unchanged at 0.25% on Friday, after official data showed core consumer prices rose 2.8% year-on-year in August.
The decision was widely expected amid concerns that rising prices could hurt consumer spending. The BoJ has been cautious about adjusting interest rates, as raising them could dampen economic activity and hamper demand-driven inflation, which it is trying to boost.
Stock and currency markets have seen increased volatility since the July rate hike to 0.25%. The central bank said it would review the impact of the previous hike before making further adjustments, to avoid further market volatility.
The BoJ's decision to keep rates unchanged comes amid a move by the US Federal Reserve to adjust monetary policy. On Wednesday, the Fed cut interest rates by 50 basis points, the first cut since the COVID-19 pandemic broke out more than four years ago.
Both Bitcoin and the stock market reacted positively following the Fed's announcement. Stock indexes rose sharply, with the S&P 500 rising 1.7%, surpassing its recent record high set in July. The Dow Jones Industrial Average also rose 1.3%, surpassing its own record set on Monday, while the Nasdaq composite index posted a 2.5% gain.
Bitcoin surged to nearly $61,000 immediately after the Fed's decision, but quickly corrected to around $60,500. However, bulls quickly bounced back, with BTC rising above $64,000 in the past 24 hours, posting a 6% gain. The Fed's move also boosted the broader cryptocurrency market, with the total market capitalization up 2%.
Bitcoin Bullish Flag
Bitcoin is forming a bullish pennant pattern on its monthly chart, indicating a potential continuation of its uptrend, according to analysis by Titan of Crypto. The pattern typically indicates a period of consolidation before a major price move. With the S&P 500 hitting a record high of 5,700 after the Fed's first rate cut in four years, it's likely that Bitcoin will also see significant gains following this trend.
The bullish pennant pattern started forming in September 2023, following a strong rally from the last quarter of 2023 and reaching a new high in March 2024. The recent consolidation period of about six months has seen a series of lower highs, creating a clear pennant pattern due to converging trend lines.
Additionally, trader Crypto Rover spotted a falling wedge pattern, combined with a bullish pennant, which further solidifies the positive outlook for Bitcoin.
A breakout from a pennant pattern typically indicates a continuation of the previous uptrend. The Crypto Titan has pointed out that a successful breakout could pave the way for Bitcoin to target $158,000 by May 2025, marking a roughly 170% increase from current prices over the next six to eight months.
The current market situation further highlights the importance of key resistance levels. According to Jelle, a cryptocurrency and stock investor, breaking the $65,000 resistance level would push Bitcoin higher. However, CrediBUll warns that the real test lies at $70,000, with the risk of rejection still present.