Coinspeaker
Bitcoin Surges after Fed Rate Cut but Bank of Japan Holds Steady
After the US Federal Reserve chose to lower interest rates by 50 basis points earlier in the week, the cryptocurrency market experienced some favorable trends. Bitcoin BTC $62 572 24h volatility: -1.2% Market cap: $1.24 T Vol. 24h: $40.14 B saw notable gains as soon as the move was made, rising as high as $63,000. It’s interesting to note, though, that the Bank of Japan (BoJ) is going in a slightly different direction.
New data from the government indicates that the BoJ has chosen to maintain its own interest rate at 0.25%. The answer to August’s 2.8% year-over-year increase in core consumer prices is this action.
It might be noteworthy that BoJ’s decision does not exactly come as a surprise. That is in light of the fact that many analysts expected it. They predicted that this was always the most likely conclusion given that concerns continue to mount over the fact that rising prices could ultimately impact consumer spending in a negative way.
By keeping the interest rate at the same level, it appears that the Bank of Japan is choosing to take a cautious style of approach. That is, managing inflation without necessarily destabilizing the economy.
BoJ Holds Rates
Without a doubt, Japan’s interest rate decision highlights the differing monetary strategies between two economic powerhouses – Japan and the US.
The Federal Reserve wants to quickly bring the economic activity in the US back to the levels before the COVID-19 era. Therefore it is employing aggressive rate cuts. On the other hand, the BoJ prefers to wait and assess the full impact of its last rate hike, which happened in July, before making further moves.
Since that decision, financial markets have experienced very high volatility, particularly in the area of stocks and currency exchanges. This has made investors extremely cautious about a potential rate increase that would not only end up increasing market fluctuations but also completely erode whatever is left of consumer confidence.
Crypto’s Role in a Changing Monetary Environment
Everyday that passes, digital assets continue to prove their increasing relevance to the global financial ecosystem. If not anything, Bitcoin’s price movement after the recent Fed’s rate cut is an indication of the fact.
However, there is also the fact that central banks around the world might sometimes take varying approaches to monetary policy, just as the case is with the BoJ’s contrasting approach to tackling its country’s inflation.
In view of these discrepancies, one might wonder what the future holds for Bitcoin and other cryptocurrencies, even though they are increasingly being viewed as a store of value and a hedge against inflation.
As noticed earlier in the week, the Fed’s decision to cut rates could open up room for further gains in the crypto space. Particularly, if concerns about inflation persist in traditional markets.
However, the BoJ’s relatively cautious approach is also a major concern as it may negatively affect investor optimism. This is especially true in Japan, where inflation is rising, but the central bank remains hesitant to adopt more aggressive monetary policies.
Overall, it is expected that Bitcoin’s price will continue to reveal the global nature of cryptocurrency markets. That is, it will continue to reflect developments in the US as well as in other major economies like Japan.
As of publication, BTC has surged 1.66% over the past 24 hours and was seen trading at $63,434. The Fed’s move has also lifted the overall crypto market, with the total market cap rising 2% in response.
For Japan, seeing as the country’s inflation remains above the 2% target set by the BoJ, the bank will likely continue to find a middle ground to foster economic growth and keep inflation in check.
Bitcoin Surges after Fed Rate Cut but Bank of Japan Holds Steady
