- The Bank of Japan could raise interest rates on Friday and send Bitcoin and the entire crypto market plummeting.
- Analysts recommend keeping 20 to 30% of your capital in cash for the next few weeks in order to realize additional purchase opportunities.
Fed Chairman Jerome Powell said yesterday at the last meeting announcedthat the next period could be turbulent as there is no longer a “risk-free path” for the central bank. He stated verbatim:
There is no risk-free path.
The options for action are relatively manageable. If the Fed cuts interest rates too much, inflation will come back. If interest rates are kept high for too long, the labor market could collapse. The decision by the Bank of Japan on Friday (BOJ) will also be important. The BOJ could raise key interest rates and thus send the Bitcoin price south.
The Bank of Japan’s decision is often treated rather casually on the markets – wrongly. When the BOJ raised interest rates in July 2024, it set off a chain reaction. Yen carry trades were hastily closed and liquidity disappeared virtually overnight. Bitcoin was not spared from this and lost around 25 percent of its value within a short period of time.
The likelihood of a rate hike is loud official data from internal meeting minutes the BOJ at over 90%. As a result, open interest in crypto derivatives could significantly accelerate outflows from Bitcoin and ETH ETFs, thereby increasing selling pressure. BlackRock’s IBIT recorded In the last 6 weeks, outflows amounted to USD 2.7 billion, making it the longest sustained negative performance since the official start on January 5th, 2024.
The situation is similar for Ethereum. BlackRock added $140 million in ETH to Coinbase yesterday transferred thereby preparing for a potential sale. At the same time, BitMine purchased 48,000 ETH for almost 142 million ETH. Overall, you can clearly observe that well-capitalized institutions are behaving bearishly and have already sold large positions or are preparing to do so.
Bitcoin dominance remains at 58%, but the BTC price looks strongly bearish on the weekly chart. There is no noticeable rotation among the altcoins, so the forecast for ETH and other coins is also bearish. At the time of writing, BTC is at 86.800 USD and draws a plus of 1% on the daily chart.
Analysts recommend keeping 20 to 30% of the capital invested in cash in order to be able to buy additional assets if prices fall. As good starting points identified The long-time Bitcoin investor and trader “Smart Money Crypto” for BTC prices below 80,000 USD and for ETH prices below the 2,500 USD mark.
As we already reported, the current selling pressure comes primarily from the derivatives market, where short positions dominate, the positioning index is clearly negative and the Fear and Greed Index has been signaling extreme fear for weeks. It remains to be seen whether the BOJ’s interest rate decision on Friday will actually start the bear market.
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