Sunday, August 4, 2024

Bitcoin Plunges After Bank of Japan Rate Hike

Bitcoin and Ethereum prices plunged following broader market action, with BTC plunging to $53K and ETH erasing its 2024 gains as panic threatened global yield markets following a Bank of Japan interest rate hike.

Bitcoin Plunges After Bank of Japan Rate Hike

Pexels.com/ Daniel Dan

The crypto market’s severe downturn has seen Bitcoin (BTC) and Ethereum (ETH) prices plunge, with BTC hitting $53,000 and ETH turning negative for 2024 amid widespread market panic. Selling intensified during US trading hours on Sunday evening, pushing Bitcoin to levels not seen since February and Ethereum back to December prices.

Bitcoin is down 12% in the past 24 hours and 20% week-to-week, while Ethereum is down 21% in the past 24 hours and 30% over the past week, erasing its gains this year. CoinGecko’s crypto index shows that most of the market is down 10% over the past 24 hours, reflecting the widespread nature of the crypto market downturn. Specifically, the decentralized finance sector fell 17.3% over the past 24 hours, down 27.8% from the previous week.

Bank of Japan Interest Rate Hike Impacts Crypto Market

The trigger for the major correction appears to have been the Bank of Japan’s unexpected interest rate hike last week, which sent the yen soaring and Japanese stocks tumbling, according to a Bloomberg report published three hours before this writing. The Nikkei index has fallen about 15% in three sessions and is now 20% below its mid-July peak. Volatility has spread globally, with the US Nasdaq down more than 5% in the last two trading sessions of the previous week.

Adding to the market uncertainty, the US Federal Reserve’s ambivalence about a potential interest rate cut in September has caught investors off guard. In response, traders have priced in a 100% chance of a September rate cut, with a 71% chance of a 50 basis point cut. The yield on the 10-year US Treasury bond has also fallen sharply to 3.75%, down from 4.25% a week ago.

The chart shows a sharp decline in the price of Bitcoin over a short period of time, with the value dropping from around $70,000 to below $55,000. The downward trajectory is sharp and consistent, showing very few moments of recovery or stabilization in price over that time period. This dramatic drop of around 17% in the price of Bitcoin suggests a significant market correction or sell-off, possibly triggered by broader economic factors.

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