BTC price sees short-term relief as the DXY falls, but Bitcoin analysts warn that Japan’s move means carnage for global markets. 5048 Total views 12 Total shares Listen to article 0:00 Market Update Own this piece of crypto history
Collect this article as NFT Bitcoin (BTC) recovered from an overnight dip on Dec. 20 as Japans central bank sparked chaos on global financial markets.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewAnalyst likens BoJ policy to FTX
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD returning to near $17,000 after falling over 3% through the course of Dec. 19.
The largest cryptocurrency benefitted from the flash United States dollar weakness, this coming on the back of a surprise policy tweak from the Bank of Japan (BoJ).
Long a deflationary environment with ultra-low interest rates, Japan woke up to a sea change on the day as policymakers lifted the cap on bond yields. The yen instantly gained against the USD, while Japans Nikkei plummeted.
Reacting, Bitcoin analysts were anything but jubilant despite the short-term benefits for BTC/USD.
Japan, seeming to follow the U.S. in attempting to tame inflation, had unleashed a can of worms which would only become apparent later, they said.
Thats what happens when you artificially surprises the free market, Arthur Hayes, former CEO of exchange BitMEX, tweeted, likely intending to write suppress instead of surprises: It blows up in your face. Expect 10yr JGB yields to trade at the 0.50% yield ceiling once USD liquidity falters in 1Q23. Yachtzee.
Hayes had previously written about central banks practice of yield curve control (YCC), which at the time he said was irreversible once started.
A further post, meanwhile,focused on BoJ ownership of Japanese bonds, now above 50%. This scenario, he said, was reminiscent of the last days of the defunct exchange FTX.
Its like the BOJ is taking lessons from (FTX ex-CEO, Sam Bankman-Fried, Hayes wrote:When you own over 50% of a market is it even a market anymore? $FTT = $JGB.Japanese government bond 10-year yield chart. Source: TradingView
Other responses were no less frank in their appraisal of the BoJ, with Marty Bent, founder of crypto media company TFTC, likening the move to it having pulled Leeroy Jenkins on the global financial system.
A minor policy tweak has huge implications that will take weeks to play out, part of remarks from portfolio manager Christian H. Cooper added:BOJ was the last low yield holdout and now that changes. Spike in rates, stocks lower (for weeks), + chaos.U.S. dollar meets perfect storm
The Japan story fed into an already fervent narrative over dollar strength, thus hitting six-month lows earlier in December.
The perfect storm for a DXY top has formed, popular analytics account Tedtalksmacro summarized.
Related:BTC price faces 20% drop in weeks if Bitcoin avoids key level Analyst
The U.S. Dollar Index (DXY) thus abandoned its attempt at a sustained recovery on intraday timeframes, retreating to lows under 104 on the day:Major central banks are now playing catch-up to the Fed, including the most dovish > the Bank of Japan. The race to tame inflation outside of the US is on, and the US look to have already done it.U.S. dollar index (DXY) 1-day candle chart. Source: TradingView
The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. #Bitcoin #Japan #Dollar #Bitcoin Price #Markets #Bank of Japan Related News Reaching the Bitcoin price bottom is a process, says The Wolf of All Streets, Scott Melker BTC price levels to watch as Bitcoin holds $17K into the Wall Street open Price analysis 12/5: SPX, DXY, BTC, ETH, BNB, XRP, ADA, DOGE, MATIC, DOT Bitcoin takes liquidity near $17K as US dollar shows weakness pre-CPI BTC price tests $17K on PPI as Bitcoin analysts eye CPI, FOMC catalysts
