BOJ Rate Hike Triggers Divergence in Global Assets

The Bank of Japan (BOJ) has increased its interest rates to 1%, marking the highest level in 31 years. This move is causing a divergence between global assets, with the money supply and equities near all-time highs while Bitcoin and crypto are declining.

BTC has fallen by 56% from its ATH of $126,000, while Ethereum [ETH] has dropped by 64% from its peak of $4,953. Historically, rate hikes have led to a sharp decline in the value of Bitcoin and other high-beta altcoins.

The strengthening JPY could create correlated sell pressure in Bitcoin and high-beta altcoins, leading to declines of 20-30%. In the past, each of the last four BOJ rate hikes has resulted in a similar drop in the price of Bitcoin.