Why Did Bitcoin Crash This Week? Here Are the 2 Reasons Why:
1. Bank of Japan's Surprise Rate Hike
The Bank of Japan's unexpected interest rate hike shocked global markets, causing the yen to surge and Japanese stocks to experience a steep decline. The Nikkei 225 index fell by a staggering 15% in just three days. This sudden market turmoil in Japan had a cascading effect worldwide, leading to significant sell-offs in various financial markets, including cryptocurrencies. The US Nasdaq also experienced a notable drop of over 5% last week as a direct result of this economic disturbance, further amplifying the Bitcoin crash.
2. Uncertainty Over US Fed Rate Cuts
The US Federal Reserve's indecision regarding potential rate cuts in September has left investors unsettled. The lack of clear guidance on future monetary policy has led traders to speculate about possible adjustments in base rates. This uncertainty has resulted in a decrease in the 10-year Treasury yield, which has fallen to 3.75%. This shift in yield has contributed to increased market volatility and played a role in the recent downturn in Bitcoin's value.
Tips and Strategies:
1. Stay Informed: Regularly update yourself with the latest economic news, particularly related to interest rates and geopolitical developments.
2. Diversify: Consider spreading your investments across multiple asset classes to reduce risk and avoid heavy losses from a single market downturn.
3. Accumulate Proven Assets: Focus on well-established cryptocurrencies like $BTC and $ETH, which have demonstrated long-term growth potential.
4. Risk Management: Implement stop-loss orders to safeguard against significant losses and avoid excessive leverage by maintaining manageable position sizes.
5. Technical Analysis: Monitor chart patterns and technical indicators to identify potential entry and exit points for more informed trading decisions.
