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Bank of Japan’s rate hikes could trigger new cryptocurrency market turmoil. Japan’s crypto market share declines as the Prime Minister’s departure looms. Recent volatility in the global economy, especially in cryptocurrencies, has raised concerns about the effects of major financial decisions. The Federal Reserve’s anticipated interest rate cuts have fueled concerns, with George Lagarias, chief economist at Forvis Mazars, warning that an aggressive Fed rate cut could pose significant risks to the market. Bank of Japan’s rate hike decision Compounding this uncertainty, Bank of Japan Governor Kazuo Ueda declared on the 3rd of September that the BOJ would continue raising interest rates if economic conditions align with their projections.  Source: MartyParty/X So for those unaware, on the 5th of August, Japan’s stock market experienced its most dramatic drop in 37 years, plummeting 12% in a single day. This crash was partly due to the “carry trade” strategy, where investors leveraged Japan’s low rates to borrow yen to purchase lucrative US assets. The ripple effects were severe, resulting in tech giants like Apple and Nvidia seeing significant declines, but the crypto market was hit hardest, facing its largest single-day drop since 2023. Additionally, Bitcoin [BTC] and Ethereum [ETH] suffered double-digit losses, while altcoins like Solana and Dogecoin saw declines of up to 30%. This massive sell-off resulted in approximately $1.14 billion in liquidations and erased nearly $600 billion from the market cap.  Hence, the Bank of Japan’s potential decision to raise interest rates has once again intensified concerns of another round of turmoil.  Is Japan’s crypto market on a decline? That being said, in a recent session with Liberal Democratic Party officials, Genki Oda, founder of SBI-owned BITPOINT and Chairman of the Japan Cryptocurrency Exchange Association, highlighted Japan’s diminishing role in the global crypto market. Oda noted that Japan’s once-dominant share…

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Filed under: News - @ September 5, 2024 8:27 pm