Bitcoin Breaks $64K as Bank of Japan Holds Constant Interest Rates

As the crypto community anticipated the resurfacing of the bulls plunged by the Bank of Japan (BoJ) slashing interest rates, Bitcoin stole the stage by attaining a new high of $64,000. Bitcoin maintained bullish momentum after the BoJ resolved to retain the current interest rates instead of lowering or hiking the borrowing cost.

 The decision to keep the interest rates constant triggers an increase in on-chain activities, with Bitcoin fortunes rising to September’s highest price.

Why Did BoJ Maintain Constant Interest Rates?

As the Japanese inflation shows signs of slowing, the BoJ announced that the interest rates would remain unchanged following an intense two-day monetary policy meeting. During the meeting, the bank observed that Japan had maintained a modest economic recovery than the estimated growth potential.

The financial regulators observed that Japan established attained economic growth of 2.9% between April and June. Despite the constant change in price and macroeconomic factors, Japan’s consumption has steadily increased, renewing consumer purchasing power in the region.

Citing data from the BoJ private consumption, the bank noted the two-month increase in real wages from July impacted high household income and spending. From the consumption assessment report, the bank concluded that Japan’s inflation was slowing, and there was no need to hike or lower the rate. 

Is Inflation in Japan Cooling?

A statement from the BoJ governor, Kazuo Ueda, reveals that the recent private consumption assessment was more positive than estimated. In the previous assessment, the BoJ claimed that consumption in the country was resilient. 

Despite agreeing to hold the current interest rate the bank will still rethink on changing the monetary policy. This decision will be determined by changes in the price of commodities and Japan’s financial and economic position.

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The bank explained that if Japan attains the projected economic position and maintains a moderate cost of living, BoJ will consider lowering interest rates and amending its monetary policies. 

In the meantime, the BoJ will maintain the interest rate at 0.25%, which was imposed in July to hedge on firing inflation. However, if Japan remained stuck in an inflationary environment, the bank would have increased the rates. 

The BoJ’s decision to keep the interest rate constant was contrary to what most experts anticipated. Data from the prediction market shows that Japanese economists and investors did not expect the BoJ to increase the rate this month. 

Some market watchers predicted that BoJ will increase the rate by December since the bank is expected to have a meeting in late October. In the upcoming meeting, the BoJ will revise the quarterly review of its economic projection, which will determine whether to increase or lower the interest rate. 

BoJ’s Unchanged Interest Rates Shakes Crypto Market

The BoJ announcement of maintaining the existing interest rates triggered the Japanese currency Yen and the stock market Nikkei to record losses. Conversely, the BoJ new rate made risky assets such as Bitcoin more appealing to investors.  

On-chain data shows that Bitcoin sustained a modest uptrend to hit $64,000 in the Asian morning. Hours after the BoJ announcement, Bitcoin saw a dramatic twist, dropping from its September highest price of  $64,000 to $63,500. 

At press time, 04:06 (UTC), BTC trades at  $62,800, a 1.12% drop in the last 24 hours.CoinMarketCap data shows that Ether reacted positively to BoJ’s rates and rose to $2,542, a 0.14% increase in a day.

Earlier this week, The Bitjournal reported that the Federal Reserve lowered the American borrowing rate after cutting interest rates by 50 basis points. The BoJ and Fed interest rate cuts affected the performance of crypto and the stock market. For more updates on how changes in interest rates impact the crypto market The Bitjournal will keep you informed.