As the Bank of Japan keeps interest rates unchanged, concerns about the unwinding of the yen carry trade have faded, driving Bitcoin and altcoins higher
The Bank of Japan (BOJ) decision to keep interest rates unchanged at 0.25% was a major macro development. This development caused the Nikkei index to surge 2.10% today to 700 points. Bitcoin and altcoins also showed strength to rise further as concerns about further easing of the yen carry trade faded.
Future rate hikes by the Bank of Japan
The Bank of Japan revised its assessment of consumption in its latest policy update, indicating its confidence that a strong economic recovery will allow the central bank to raise interest rates again in the coming months.
"Private consumption showed a moderate growth trend despite the impact of rising prices and other factors," the Bank of Japan said in a statement.
Markets are closely watching how Bank of Japan Governor Kazuo Ueda plans to implement future rate hikes amid global economic uncertainty. In addition, the Bank of Japan's unprecedented rate hikes this year have heightened concerns about the unwinding of yen carry trades and a stronger yen. The Bank of Japan ended negative interest rates in early March, abandoning a decade-long stimulus program to boost inflation.
In the last month of August, core consumer inflation reached 2.8%, rising for the fourth consecutive month. Ueda said the Bank of Japan will continue to raise interest rates if inflation continues to remain at its 2% target. Recent reports from Reuters show that most economists expect the Bank of Japan to raise interest rates in December.
Are Bitcoin and Altcoins about to rebound?
As the Bank of Japan keeps interest rates stable, risk assets such as cryptocurrencies are enjoying gains. Bitcoin prices surged 3%, moving closer to $64,000. On the other hand, altcoins, led by Ethereum, rose between 4-10%.
Bitcoin has shown strength for the first time in nearly four years following the Federal Reserve’s rate cut earlier this week. Interestingly, this strong recovery has not been accompanied by any strong FOMO, according to data from Sanitment. This suggests that the recovery in the Bitcoin and altcoin markets is healthy and can continue.
Looking at the technical charts, Ethereum price is also showing signs of recovery from its recent gains. Despite the recent transfer of ETH from Vitalik Buterin’s address, the chart below shows a strong recovery with the potential for a rally to $5,000.
