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The Bitcoin price is falling drastically again. Over the last 24 hours, BTC fell by 6.51 percent, reaching a low of $84,791 this afternoon. Just last week, the market seemed to be recovering. Why the Bank of Japan is now dealing a new blow to crypto.
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Bitcoin price falls below $85,000
The Bitcoin price is falling again – today it reached a new low below $85,000 at around 1:50 PM Swiss time. According to CoinMarketCap, the largest cryptocurrency fell to as low as $84,791. Over the last 24 hours, this corresponds to losses of 6.51 percent. Yesterday, Bitcoin was still trading above $91,800.
- Bitcoin
(BTC) - Price $84,962.00
- Market Cap
$1.7 T
BTC is thus experiencing another severe setback. Just last Wednesday, the cryptocurrency was able to reverse a multi-week bearish trend and rose back above $90,000. Some analysts even predicted the start of another price rally after the start of a recovery.
These forecasts are now questionable for the time being. Parallel to Bitcoin, a large part of the crypto market fell again. A pessimistic mood is spreading among investors.
In the last 24 hours alone, the entire crypto market fell by 6.30 percent to a market capitalization of $2.92 trillion. In addition to BTC, many other major cryptocurrencies are also posting significant losses in the daily trend.
For example, the Ethereum price has fallen by around 7.63 percent since yesterday. XRP fell by 8.57 percent and BNB by 8.75 percent. Solana, Dogecoin, and Cardano are recording losses of between nine and eleven percent.
- Ethereum
(ETH) - Price $2,740.57
- Market Cap
$331.07 B
Why is crypto crashing?
The question is: Why is crypto crashing so drastically again? At the end of October, the US Federal Reserve (FED) caused several bearish weeks. During this time, the market reassessed cryptocurrencies under the new monetary circumstances. FED Chairman Jerome Powell had expressed doubts about a widely expected key interest rate cut in December.
Just last week, a bottom seemed to have formed. The recent price crash, on the other hand, is a reaction to statements by the Bank of Japan (BoJ). Central Bank Governor Kazuo Ueda stated that key interest rate hikes in Japan are very likely. These could be continued as early as December.
Japan could thus significantly revalue the weak yen. Over the last few years, the Japanese fiat currency has lost significant value against the US dollar. In December 2020, one yen was still equivalent to $0.0096. Meanwhile, one yen is now only worth $0.0065. By means of rising key interest rates, one could react to a persistently high inflation rate beyond two percent.
Since January, the Japanese key interest rate has been 0.50 percent. According to expert assessments, this value is expected to rise to 0.75 percent on December 19 – an increase of 25 basis points.
Japanese government bonds with 30-year, ten-year, and two-year terms are already delivering the highest yields since 2008 in response to the BoJ’s new policy. 20-year bonds are even delivering the highest yield since 1999, Yahoo Finance notes.
The yen thus offers interesting investment opportunities, which institutions in particular are trying to take advantage of. They can quickly release liquidity stuck in the crypto market in order to shift their capital into the yen.
“BTC has crashed because the BoJ has brought an increase in interest rates into play,” crypto entrepreneur Arthur Hayes summarized.
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Shortly before the announcement by the Bank of Japan, Hayes stated that he is sticking to his Bitcoin price forecast. Accordingly, BTC will rise to as much as $250,000 this year.
