Bank of Japan Rate Hike Ahead: What to Expect
This week is set to be a significant one for the crypto market and the global economy as central banks in Japan, the US, Australia, and other countries announce their decisions on interest rate hikes. The Bank of Japan (BoJ) will start its two-day policy meeting on Monday, March 18, and there are reports that it will end its negative interest rate, marking its first rate hike in 17 years.
Bank of Japan Speculated to Increase Interest Rates
There is growing speculation that the Bank of Japan (BOJ) may raise its key interest rate following Japan’s largest union group announcing strong wage deals, which haven’t been seen in over three decades. This anticipation has led to a slight decline in the yen against the dollar during Asian trading hours.
The MSCI Asia Pacific Index saw gains in Asian trading, driven by a rally in Japan and a weaker yen. The tech-heavy Nikkei 225 index experienced its largest surge in a month. Meanwhile, US equity futures rose after the S&P 500 declined by 0.7% on Friday.
Bloomberg data shows that swaps traders have priced in approximately 28 basis points worth of rate hikes for this year, with a 54% chance of a March hike. Goldman Sachs predicts that the BOJ will raise rates in response to wage increases and expects the short-term rate to be in the range of 0% to 0.1%. Goldman Sachs Group Inc. economist Tomohiro Ota wrote:
“These developments imply that the BOJ probably no longer needs more data for the policy change, nor to wait to justify the policy change with the quarterly Economic Outlook report in April.”
What to Expect in Bitcoin and Crypto Markets
This week could bring significant volatility to the Bitcoin and broader cryptocurrency market. Over the weekend, the Bitcoin price briefly dropped below $65,000 but quickly recovered. It is currently trading 3.27% higher at a price of $68,620.21 with a market cap of $1.348 trillion.
Analysts at QCP Capital have noted a shift in sentiment, with heavy selling of BTC puts indicating diminishing fear among investors who are now looking for buy-the-dip opportunities. There is also notable interest in long-dated September and December BTC calls, targeting price levels between $100,000 and $150,000 USD, suggesting growing optimism or “greed” in the market.
However, there are concerns surrounding Ethereum (ETH) as perpetual funding turns negative and risk reversals continue to show a downside skew. Despite the ongoing rally in alternative cryptocurrencies (altcoins), there is still apprehension about a potential downturn in ETH prices.
Hot Take: Crypto Market Volatility Ahead
This week brings several crucial decisions from central banks around the world, including the Bank of Japan’s potential rate hike. These decisions can have a significant impact on both traditional markets and the crypto market. Here are some key takeaways:
Bank of Japan’s Rate Hike
- The Bank of Japan (BoJ) may raise its key interest rate following strong wage deals announced by Japan’s largest union group.
- The anticipation of a rate hike has led to a decline in the yen against the dollar.
- The MSCI Asia Pacific Index saw gains due to a rally in Japan driven by a weaker yen.
- Swaps traders have priced in rate hikes for this year, with a 54% chance of a March hike.
Bitcoin and Crypto Market Volatility
- The Bitcoin price experienced a brief drop below $65,000 but quickly recovered.
- Analysts note a shift in sentiment, with investors showing less fear and looking for buy-the-dip opportunities.
- There is growing optimism in the market, with notable interest in long-dated BTC calls targeting higher price levels.
- Concerns remain regarding Ethereum as funding turns negative and risk reversals show a downside skew.
This week will be crucial for both traditional markets and the crypto market as central banks make their decisions. Keep an eye on the Bank of Japan’s rate hike announcement and the volatility in the Bitcoin and crypto market. Stay informed and prepared for potential market movements.
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