Journalist
Posted:
Investors are closely watching the week ahead.
In a recent development Nikkei Asia reported that the Bank of Japan (BOJ) will implement a 25 basis point rate hike at its policy meeting on December 18 and 19, which will shake markets almost immediately.
On the charts, Crypto Total Market capitalization fell 2.4%, with Bitcoin [BTC] slipping about $2k and losing the $90k handle.
The step was also not an isolated one for crypto. US stocks also sold off, causing the S&P500 to fall 7% at the time of writing.
Source: TradingView (TOTAL/USDT)
Notably, the fallout caused leverage as traders unwound their positions.
Liquidation details shows around $300 million wiped out, with nearly 87% coming from long positions positioned for a recovery following BTC’s nearly two-week consolidation above $90,000, adding additional downward pressure.
On the sentiment side: crypto sank deeper into the ‘fear zone’, reflecting a clear shift towards risk-free behavior. Against this backdrop, could the upcoming BOJ meeting be the trigger for another October-style crash?
The BOJ’s policy shock puts the crypto market on edge
The BOJ news shook more than just the crypto market.
Following the development, Japanese yields rose 2.9% and neared a record high. This indicates that investors now need higher returns to hold Japan’s massive government debt, which already amounts to 200% of total GDP.
Meanwhile, the Yen Index (JXY) fell 0.2% and failed to break $64, keeping carry trades under pressure. Overall, the expected rate hike has disrupted both domestic and global market sentiment, making it something to watch closely.
Source: TradingView (JPX)
But how does this work? actually enter the crypto market?
The BOJ has long provided traders with cheap yen to finance investments worldwide. In this context, a rate hike would obviously increase financing costs, forcing traders to withdraw capital from US markets.
However, the crypto market could feel the impact even more.
FOMO is fading, key support is under pressure, and long-term liquidity increases around critical zones. In turn, Bitcoin could quickly move into these clusters, creating conditions for another October-style crash.
Final thoughts
- The BOJ’s upcoming interest rate hike roiled global markets: Japanese yields soared, and risk appetite for equities and crypto fell sharply.
- In crypto, FOMO is fading, key BTC support is under pressure and growing long liquidity clusters could trigger another sharp downward move.