The Bank of Japan (BoJ) announced an interest rate hike to 0.5%, a significant rise in 17 years, fueled by a consumer price index (CPI) of 3.6%, surpassing 3 .4% expected.
The rise in rates coincided with an impressive rise in crypto prices, as Bitcoin led major altcoins in the 3-6% gain range. The rally saw Bitcoin reclaim the price from $105,000 and Ethereum surged above $3,390. The gains saw the altseason index hit 53, prompting investors to forecast a 500% rise, potentially lifting their market capitalization to $6.48 trillion.
The BoJ’s recent hawkish decision to raise rates to 0.5% is the first since the 2007-2008 financial crisis. This follows the 25 basis point hike declared by the BoJ, in line with market expectations. This highlights a policy shift in Japan not seen since the 2008 financial crisis.
Market reaction to BoJ rate hike
Market anticipation of higher interest rates came to fruition as Bitcoin regained its bullish momentum to lead other altcoins, including Ethereum, to healthy gains of 3-6%. The US Dollar Index (DXY) fell to create favorable conditions to trigger an upward trajectory for the cryptocurrency.
One striking development was the Japanese yen, which regained strength against the US dollar during the early Asian hours, suggesting increased market activity.
The BoJ’s decision contrasts with the conciliatory position of The Turkish central bank lowered interest rates by 250 basis points, setting the benchmark at 45% on Thursday (January 23). Unlike Japan, Turkey is experiencing an easing cycle as its annual inflation fell to 44.38% last month. The trend shows a sustained decline toward the 5% target in a few months since peaking at 75% in May last year.
With the Turkish Central Bank hinting that it will continue its easing measures in the coming months, Japan is losing control of inflation, reinforcing the BoJ’s hawkish decision to raise rates. The CPI jumped sharply, from 2.9% to 3.6%, beating the market forecast of 3.4%.
The Consumer Price Index (CPI) rose to 3.6%, beating market expectations of 3.4% and up sharply from 2.9% earlier. The figures illustrate the increased inflationary pressure that is likely to reinforce the BoJ’s belief that adopting strict monetary medicine would produce the desired effect.
A resilient crypto market despite rising rates
The recent 0.25% rate hike follows the turbulence seen last year when the BoJ first announced a similar measure, sending widespread shockwaves through global markets. Reflecting on the first rise in rates reveals an attempt to counter the yen-bearing trade, sending altcoins and Bitcoin into a downtrend.
The recent market reaction has been noticeably calmer, with major cryptocurrencies holding firm. Bitcoin is currently changing hands at $104,706, down slightly from $105,100 after gaining 3.30% on the news.
Although Bitcoin led gains in the digital asset market, it limited the price to a narrow range, but it was unable to capitalize on the momentum seen during Trump’s inauguration. Bitcoin’s path to a breakout to $110,000 is on hold, although it is likely to rely on a crypto-focused fiat to test the lofty targets predicted by analysts.
Altcoins showed resilience during the BoJ rate hike, with Ethereum up 6% to $3,390, while Cardano (ADA), Solana (SOL) and Chainlink (LINK) advanced by an average of 4%. The gains demonstrate the resilience of altcoins and renewed optimism in the digital asset market, unlike 2022.
Will BTC Golden Time Mark Altcoin Season?
Thinking about Bitcoin price action shows an inverse correlation between BTC and the US Dollar Index. Analysts believe that the persistence of this relationship shows a potential golden age for Bitcoin.
The Altseason Index rose above 53, suggesting growing confidence among crypto investors. Renewed interest in cryptocurrencies following President Donald Trump’s efforts to establish a digital asset stock could propel altcoins even further.
Crypto analysts predict that altcoins are poised for a massive uptrend, perhaps a 500% rally that would take them to a value of $6.48 trillion. This anticipation of the altcoin season on the horizon has many investors waiting. parabolic growth models.
