Crypto Stays Strong as Bank of Japan Hikes Interest Rates

On Friday, the Bank of Japan (BOJ) raised its interest rates to 0.5%, the highest level since 2008. 

Although Japan’s central bank’s rate hike was expected to reduce demand for riskier assets and cause short-term corrections in stocks and crypto as investors seek safer returns, the crypto market’s reaction has been less severe than expected, showing its resilience despite tighter financial conditions.

BOJ Increases Interest Rates

Japan’s central bank has raised borrowing costs from 0.25% to 0.5%, the highest level since 2008, signaling its commitment to gradually increasing rates toward around 1%.

This marks the third rate hike in less than a year, reflecting a shift in Japan’s monetary policy amid persistently high inflation, projected to remain between 2.6% and 2.8% in 2025.

Despite three hikes in less than a year, the Bank of Japan still maintains the lowest benchmark rate globally.

Crypto Market Remains Resilient

The overall cryptocurrency market remained steady through Friday’s Asian trading hours, demonstrating resilience amid Japan’s monetary tightening.

The total market cap slightly corrected, dropping from $3.58 trillion to $3.56 trillion during Asian trading hours. 

Crypto market cap holds steady despite Bank of Japan interest hikes. Source: TradingView

The initial dip, including a 3% drop in Bitcoin’s price, was brief, with major cryptocurrencies like Ethereum (ETH), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) also experiencing mild pullbacks before regaining strength.

This stability follows optimism from Thursday when US President Donald Trump signed an executive order banning the digital dollar and promoting innovation in crypto and AI.

Why This Matters

As cryptocurrencies remain in a bullish phase, their resilience to tightening monetary policies could strengthen their position as a compelling alternative for investors seeking opportunities outside traditional markets.

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