BOJ Interest Rate Hike Decision Negatively Impacts Bitcoin

CoinDesk 20 Index: 1,857.87 +0.73%Bitcoin (BTC): $59,022 +0.84%Ether (ETH): $2,506 −0.53%S&P 500: 5,648.40 +1%Gold: $2,495.38 −0.07%Nikkei 225: 38,686.31 −0.04%

Although Bitcoin rose above $59,000, the rally was suppressed by the proposed rate hike in Japan.

According to the CoinDesk 20 Index, BTC has gained 1% in the past 24 hours, while the broader crypto market has gained around 0.9%. There are plenty of economic data releases in the US this week, starting with the Institute for Supply Management’s August manufacturing purchasing managers index later in the day.

Economic data due from the U.S. this week will determine whether the dollar extends its two-month weakening trend and offer support for risk assets including cryptocurrencies.

Bank of Japan Governor Kazuo Ueda said the central bank would raise interest rates further if the economy and inflation develop as expected.

Ueda stressed that the economic climate was conducive to the decision, with inflation-adjusted interest rates remaining negative even after a late-July spike in the benchmark borrowing cost. Ueda’s comments boosted bids for the yen, pushing USD/JPY to 145.85 from 147.

Futures tied to the S&P 500 fell 0.5%, according to CoinDesk data. The BOJ’s plan to tighten monetary policy poses a significant challenge to risk assets as the U.S. Federal Reserve is likely to begin cutting interest rates in September.

Earlier this year, Japanese investment advisor Metaplanet, which accepts bitcoin as a reserve asset, approached SBI VC Trade to provide custody services.

Crypto exchange SBI VC Trade, a unit of Tokyo-based SBI Holdings, is offering the potential to use BTC as collateral for financing, Metaplanet reported yesterday.

In May, Metaplanet announced that it had adopted bitcoin as a reserve asset to protect its assets against the yen’s volatility. The company said it had 360.4 BTC ($21 million) as of Aug. 20.

The chart shows the cumulative volume delta (CVD) of the top 25 cryptocurrencies by market capitalization, adjusted for weekly open interest. The positive CVD of XMR and APT indicates that there are net inflows in the perpetual futures market for these two cryptocurrencies. Other cryptocurrencies, including BTC, are facing selling pressure. Source: Velo Data