Why did the Japanese market collapse, dragging down the crypto market? So much so that, subjectively, there is a growing feeling in the market of a return to November 2022, numbing fear, growing panic and misunderstanding of even the immediate prospects. A vivid description of the situation in which the best purchases of fear are usually made.

#Coindesk reminds that last week the Japanese central bank raised interest rates by 0.25% for the first time in 17 years.

And he made it clear that he could raise the rate further. As a result, this strengthening of the yen led to a corresponding decrease in risky assets (including, of course, crypto assets). 

This had catastrophic consequences for the Japanese stock market. The largest one-day collapse in the NIKKEI since 1987. In terms of the dynamics of the collapse of this index, the situation is close to the “Covid” dump of 2020 (the drop is already -26% versus -31% then). And the three-day decline in the Japanese Topix index, according to #Bloomberg, has already become the worst since the Fukushima disaster in 2011. Leveling out the annual increase. Trading in Topix and Nikkei futures was suspended. When indices in a country fall as if there is a pandemic and a nuclear disaster outside the window, you must agree, this is impressive.

The index sales come amid a sharp rise in the yen, which has already worsened profit prospects for Japan's export-oriented industries. In general, individual companies fell sharply, for example, Mitsubishi UFJ (-12.1%), Sumitomo Mitsui (-11.2%), Tokio Marine Holdings (-10.2%). Chip and semiconductor manufacturing companies are also under attack (which adds to concerns about the prospects of tech giants focused on AI).

In Japan, only government securities, including Treasury bonds and Japanese government bonds, are now doing well.

And markets are betting on two more interest rate hikes by the Bank of Japan this fiscal year, which ends in March 2025. 

The situation in Japan has also affected other Asian markets. South Korea's Kospi index fell more than 4% in early morning trading, while Australia's S&P/ASX 200 fell nearly 3%. Taiwan's main stock market index fell more than 6%.

All this overlaps with the situation in the States. Where, firstly, the risks and fears of recession are growing. And secondly, disappointing data shows large technology companies are exhausting themselves (in their current format) as potential for growth in the artificial intelligence narrative.

Against the backdrop of general panic and dumps, some analysts remain optimistic and suggest that in the coming days the market may reach a local (!) bottom. Quote from Lucy Hu, Senior Analyst at #Metalpha:

“The recent pullback is the result of a broader tightening of market-oriented economic policies in Japan, where the central bank's hawkish stance suddenly gave way to higher interest rates... Bearish macroeconomic data in the US has investors worried about a possible recession...

… However, despite the lack of official confirmation of the Fed rate cut in September, the market has priced this event in place and we should expect BTC price to recover as macroeconomic conditions improve.”

The question of expectations from Japanese markets remains open. It doesn't look like a V-turn can be expected. But the key focus for the crypto market now is still the United States. The question is whether the US Federal Reserve will give signals to lower interest rates. Will there be an extraordinary meeting? If so, the pump movements in the US markets may return and cause optimism towards the crypto market.