Bitcoin and crypto rally to new highs as Bank of Japan spurs uncertainty with the possibility of interest rate hikes this month.
In the early Asian trading hours on Monday, March 11, Bitcoin (BTC) and the broader cryptocurrency market registered an upside amid global macro developments. There’s growing speculation that the Bank of Japan (BOJ) might raise the benchmark interest rate above zero during its upcoming meeting on March 18-19. Reports from Bloomberg suggest that bets on the BOJ making this move have gained momentum. This would mark the first interest rate hike by the BOJ since 2007.
As a result, Bitcoin has attained a new all-time high and currently trading at $71,605 with a market cap of $1.406 trillion, as of press time. Altcoins are also playing catchup with Ethereum (ETH) once again moving closer to the crucial resistance of $4,000. Binance BNB coin has also been gaining strength shooting past $520 and extending its weekly gains to more than 26%.
As the Bank of Japan mulls shifting away from its negative interest rate policy, it may also discontinue its bond-buying program. Analysts have consistently cautioned that the BOJ presents a significant uncertainty factor for both traditional and cryptocurrency markets.
Since 2016, the BOJ’s Negative Interest Rate Policy (NIRP) and bond-buying initiatives have exerted downward pressure on global government bond yields. It has also contributed to the support of asset prices. Despite its counterparts, such as the US Federal Reserve, implementing rapid rate hikes to combat inflation, the BOJ has maintained a pro-liquidity stance in the past two years.
However, the BOJ is now facing mounting pressure to raise rates, driven by domestic inflation surpassing its target.
All Eyes on the US CPI Data This Week
The primary focus of this week’s economic data reports will be Tuesday’s release of the US consumer price index figures. Projections suggest that the core prices gauge is likely to increase by 0.3% in February compared to the previous month and by 3.7% on a year-over-year basis. If true, this will also be the smallest annual rise since April 2021.
Despite a decrease in the expected number of Federal Reserve rate cuts for the year, ongoing moderation in US prices would strengthen the existing disinflation narrative.
In the commodities market, gold is edging closer to a record high on account of the Federal Reserve’s outlook. Meanwhile, oil prices are experiencing a decline ahead of forthcoming reports from OPEC and the IEA, which are expected to offer insights into the demand outlook.
📊 #Bitcoin (+10.0%) and #Ethereum (+14.7%) notably outpaced #SP500 (+0.5%) returns this week. Historically, #cryptocurrency markets see sustained #bullmarkets with little to no correlation with #equities, so traders are hopeful this trend continues. https://t.co/dgRoilWYuJ pic.twitter.com/yUVYP5KFQI
— Santiment (@santimentfeed) March 9, 2024
According to Santiment, Bitcoin and Ethereum have significantly surpassed the returns of the S&P 500 (+0.5%) last week. Santiment reports that historically, cryptocurrency markets have shown sustained bull markets with minimal correlation to equities. As a result, traders are optimistic that this trend will persist.