Did the Bank of Japan crash Bitcoin?

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Last Updated on 20 March 2024 by CryptoTips.eu

On Tuesday, March 19, Bitcoin fell about 8% in just a few hours. Analysts immediately looked for a cause.

Although data the night before already showed that the inflow into Bitcoin ETFs in the United States had slowed since last week (in other words, American Boomers invested slightly less in Bitcoin funds after hitting a new record), Japan was still the focus of attention. Also the Bitcoin ETFs saw the biggest outflow since their launch.

Let us explain.

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Japan increases their interest rates

The world economy works virtually in tandem with each other due to globalization. If China slows down, it will have an effect on Europe and the United States, for example.

In previous years, the focus was mainly on inflation and how to get it under control. This year, inflation finally seems to be under control and interest rates are due to fall. The US and European central banks have been keeping interest rates high for some time to control inflation, and investors expect interest rates to start falling as from this summer.

Because of this future ‘hope’, large investment funds are increasingly purchasing risky investments such as tech shares and crypto in ever greater numbers in the past few months.

However yesterday world markets noticed that this story isn’t necessarily true. The Japanese central bank decided to raise interest rates for the first time in 17 years. They couldn’t lower it because the interest rate in Japan has been at 0 for years.

This makes borrowing for a house or a major purchase more expensive for young Japanese, and there is concern that they will invest less in riskier investments such as crypto.

18% pullback for Bitcoin

After the Japanese interest rate decision became world news, Bitcoin fell further until it found support in the afternoon when the American stock markets reopened.

US investors themselves were already stressed out for today as the Federal Reserve is supposed to give an indication of where interest rates are headed.

Analysts called the pullback of the last few days quite normal, which we also did last week when we recognized the first signs of a correction.

At the time of writing, Bitcoin is trading for $62,500.

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
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