Who is behind the sudden market drop? The answer: the Bank of Japan.
1. Background: Bank of Japan’s Role
Japan is a major global exporter of capital, with trillions invested in overseas markets, especially the U.S. Recently, expectations of a Bank of Japan interest rate hike in December have shifted market dynamics.
2. Impact on Global and Crypto Markets
Japanese bond yields have reached their highest levels in 20 years, making domestic investments more attractive for Japanese investors. As a result, Japanese capital is being repatriated, leading to the selling of U.S. assets (bonds, stocks) and increased investment in Japanese government bonds. This capital shift puts pressure on higher-risk assets first, notably cryptocurrencies, which have seen sharp declines ahead of other markets.
3. Key Notes and Outlook
Japanese bond yields are at a 20-year high. The Japanese yen is under significant pressure, trading between 155–160 per dollar. To stabilize the yen, the Bank of Japan’s main option is to raise interest rates, which could further influence global and crypto markets.
Summary: The recent market drop, especially in crypto, is largely driven by Japanese investors moving capital back home in anticipation of a Bank of Japan rate hike. This has led to heavy selling of risk assets, with crypto being affected first. $BTC $ETH $BNB #CryptoIn401k