According to CoinDesk, the Bank of Japan's (BOJ) influential governor, Shinichi Uchida, has downplayed concerns about a rate hike amid market volatility, leading to significant market reactions. Uchida stated that the central bank would not increase borrowing costs during periods of market instability, which has implications for various financial assets, including bitcoin and stock futures.

Uchida's comments were made during a speech to business leaders in Hakodate, Hokkaido, where he emphasized the necessity of maintaining current levels of monetary easing due to sharp volatility in domestic and overseas financial markets. This stance suggests limited downside for cryptocurrencies like bitcoin, even as the bearish technical pattern known as the death cross looms. The death cross occurs when the 50-day simple moving average (SMA) falls below the 200-day SMA.

Following Uchida's remarks, bitcoin traded firmly, briefly surpassing the $57,300 mark. Concurrently, the Japanese yen depreciated to 148 per U.S. dollar from 145 per USD, and Japan's equity index, Nikkei, rose by 4%, indicating a risk reset. Futures tied to the S&P 500 also increased by 0.8%. Pseudonymous market observer Global Macro noted on X that the BOJ's stance would drive the Nikkei, Nasdaq, and S&P 500 back to their pre-selloff levels.

The yen carry trade, which involves borrowing yen at low interest rates and investing in higher-yielding currencies and risk assets, has been popular due to Japan's zero interest rate policy. However, last Wednesday, the BOJ raised rates for the first time in 17 years, leading to an unwinding of carry trades and broad-based risk aversion. This move caused bitcoin to drop from $66,000 to $50,000 within five days.

Andy Constan, CEO of Damped Spring Advisors, explained on X that the sell-off in equity markets and other risky assets began around July 16th, driven by recent entrants into the yen carry trade seeing their assets fall. The yen's slow rally further triggered the unwinding of the trade, resulting in inelastic price movements to buy yen and sell risky assets. This also impacted levered investors without yen exposure, leading to margin calls.