Bank of Japan vs Bitcoin

This week the spotlight is on the Bank of Japan and its Governor Kazuo Ueda. Over the past month or two, investors and markets have been closely watching the rising cost of borrowing in Japan as yields surge. The 30 year Japanese yield is now at all time highs and the 10 year continues to push higher, currently sitting at its highest level since 2007.

This has major implications for the yen carry trade. As borrowing costs rise, the risk of the trade unwinding grows.

We saw this play out last year when the BOJ unexpectedly raised rates, which led to Bitcoin falling 30% in a matter of days alongside other risk assets.

So how do BOJ rate hikes actually impact Bitcoin?

The chart above shows Bitcoin price in orange and BOJ interest rates in red. For most of Bitcoin’s life, it existed during a period of negative or zero rates in Japan. Over the past few years, however, we have seen the BOJ begin to tighten policy. Each time this has happened, Bitcoin has had a clear negative reaction. Historically, BTC has dropped more than 30% following these hikes.

Friday is when the BOJ is expected to announce its next decision. According to Polymarket odds, there is currently a 97% probability of a 25 basis point hike. Whether or not Bitcoin reacts the same way it has in the past, the strategy remains unchanged. Accumulate through the noise. One thing remains consistent in the chart above, after each rate hike and correction, Bitcoin has returned to higher prices.

Stormrake Spotlight: Pax Gold (PAXG) ($4,317)

PAXG was up over 1% intraday yesterday but some late selling pressure saw it close flat and slightly red on the day. Nothing to worry about. Bulls are still in control and eyeing another move higher.

BTC/USD Key Levels and Price Action:

Bulls attempted to reclaim the range with a move back above $88,888, but it was short lived. Bears stepped in quickly and rejected the move, pushing price lower to the next key support at $85.2K. In the short term, momentum is clearly with the bears.

Medium time frame structure remains neutral. We are seeing a series of higher lows, highlighted by the blue rectangles, with the low at $80K followed by a higher low at $84K. If price holds above that zone and forms another higher low here, we could see one more attempt at the yearly open at $93.5K.

If this move breaks below the $84K level, however, we are likely heading back to $80K with bears taking full control of the medium term structure.

BTC Total ETF Flows for 15 Dec: $ - 62.0 million

*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis

Create a brokerage account today

No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

Disclaimer

All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.