Bitcoin Price at Risk as Bank of Japan Hints at Rate Hike, Could Plunge Below $50K?

Bank of Japan Governor Kazuo Ueda's signal of an upcoming rate hike has sparked fears of Bitcoin's price crashing below $50K as the market braces for potential impacts.

Bitcoin Price Under Threat as BOJ Eyes Rate Hike

If the economy and prices continue to perform as anticipated, the governor of the Bank of Japan (BOJ) has stated that the central bank will increase interest rates even more.

After falling to two-week lows, the Japanese yen recovered and is now trading near 146 to the dollar, thanks to expectations of a more expansionary monetary policy from the Bank of Japan.

Kazuo Ueda Reiterates BOJ's Commitment to Rate Hikes

According to Bloomberg, in a document provided to a government group chaired by outgoing Prime Minister Fumio Kishida, Bank of Japan Governor Kazuo Ueda emphasized the need for more rate hikes on September 3.

This latest confirmation served as a reminder to investors that the Bank of Japan will increase borrowing costs if its predictions come true, even if the market crashed in response to the rate hike in July. The comment caused the Japanese yen to surge more than 146 vs the US dollar today.

December Likely for BOJ Rate Hike, Economists Predict

A rate hike by the BOJ before the year ends was predicted by two-thirds of the economists polled. Among the most probable months, 41% of people surveyed think December. Pacific Investment Management, in contrast, had anticipated a January rate hike.

The hawkish perspective expressed by the Bank of Japan caused the yield on Japan's 10-year government bonds to rise beyond 0.92%, reaching a four-week high.

Return of Yen Trading Spurs Market Crash Fears

Trading in Japanese yen that caused market crashes is reportedly making a return, according to Japan's largest brokerage business, Nomura Holdings, which CoinGape previously reported. More people will start carrying bets on the yen if the interest rate differential between the Federal Reserve and the Bank of Japan stays wide.

This might lead to a repeat of the Bitcoin price fall of Black Monday and subsequent sell-offs in the cryptocurrency market as a whole.

Fed’s Rate Cuts May Prevent Bitcoin Market Downturn

However, US Federal Reserve Chair Jerome Powell has dropped hints that the Fed would begin cutting rates in September. The market is still anticipating 100 basis point rate cuts for the year, and a September rate decrease of 25 basis points is 67% likely, according to CME FedWatch data. Due to the narrowing of the gap, a market meltdown would be prevented.

Due to market uncertainty, the price of Bitcoin is struggling to breach above $60,000. With today's gains cut in half, Bitcoin hit an intraday low of $57,568. In addition, there has been a 10% drop in trading volume over the past 24 hours, suggesting that traders are losing interest.

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