Bank of Japan holds rates at 0.75%: Will this finally ignite the crypto market?

BoJ Holds Steady: A Bullish Signal for Bitcoin and Crypto?

The Bank of Japan’s decision to leave its rates unchanged at 0.75% was met with some relief by risk markets like the crypto market. In a tense macroeconomic context, any surprise hike could have triggered a wave of Panic Sell across digital assets. However, this hold comes with a critical update: the BoJ has revised upward its economic growth and inflation forecasts.

For savvy traders, this detail is far from trivial. It suggests the institution is laying the groundwork for future rate hikes, a prospect often Bearish for cryptocurrencies. The market currently finds itself in a consolidation phase, digesting this news which, while neutral in the short term, could signal a reduction in global liquidity over the medium term.

Bitcoin, which reacts strongly to fluctuations in fiat money supply, could see its volatility increase in the coming days. Whales appear to be adopting a wait-and-see posture for now, watching whether this rate level will support current supports or if selling pressure will regain the upper hand.

Does the Specter of “Yen Carry Trade” Still Threaten Liquidity?

The real challenge for the crypto market lies in the mechanics of the “Yen Carry Trade”. Historically, investors borrow Yen at low cost to invest in high-yield assets like cryptos. With rates maintained at 0.75%, this mechanism remains viable for now, which supports prices. But the situation is fragile.

Japan is currently navigating between a desire for monetary tightening and the need for fiscal expansion ahead of snap elections. This collision creates massive uncertainty. If the Yen were to strengthen abruptly following planned economic adjustments, we could witness a massive unwinding of positions, triggering a severe retracement across the entire market, similar to past liquidity shocks.

Technical analysts are closely monitoring Yen-related pairs. Too rapid an appreciation of the Japanese currency would act as a handbrake on the bull run. Conversely, if the BoJ remains accommodative longer than expected, this could act as a catalyst to propel Bitcoin toward new highs.

Should We Expect Extreme Volatility on Altcoins?

While Bitcoin serves as a relative safe haven within the ecosystem, Altcoins are on the front line facing liquidity risks. The BoJ’s decision, though stable in appearance, injects a dose of uncertainty that could shake lower-cap tokens. In the absence of massive capital flows, alts could struggle to break their immediate resistance levels.

However, certain sectors of DeFi and Layer 1 infrastructure are showing surprising resilience. If the market interprets the rate hold as a green light for risk-taking (“Risk-on”), we could see capital quickly return to Ethereum and Solana. But for now, traders seem to be fleeing altcoins.

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