Will Bitcoin and Altcoins Crash Following Bank of Japan Rate Hike This week?

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After an initial drop in value on Monday, Bitcoin and other cryptocurrencies have shown a significant rebound. This resurgence is occurring alongside heightened excitement about the Donald Trump inauguration and increased interest in TRUMP-themed meme coins. Still, investors might choose to exercise caution due to the upcoming decision by the Bank of Japan regarding interest rates.

Bitcoin and Altcoins Subject to Macro Developments

Over the past day, the price of Bitcoin has experienced significant fluctuations, dipping below $100,000 only to form a large 10% candle and reach an all-time high of approximately $110,000. This volatility can be attributed to the excitement surrounding the introduction of TRUMP meme coins, which were backed by Donald Trump’s inauguration on Monday. Notably, crypto market analyst Rekt Capital suggested that for Bitcoin to confirm new record highs in the future, it needs to close the week above $104,740.

As I closely examine the chart, I can’t help but notice that a weekly close beneath the significant resistance level (red line) might signal another potential pullback in Bitcoin. Although it could be a shorter retreat compared to the one experienced in mid-December 2024.

Additionally, significant economic shifts such as decreasing Core Consumer Price Index and robust employment data in the U.S. have also fueled the recent market surge. Investors are now focusing on the Bank of Japan’s upcoming interest rate decision this Friday, which aims to elevate rates to levels not seen in 17 years. Based on today’s price breakout, technical analysis hints that Bitcoin’s price rally towards $158,000 remains a viable possibility.

#Bitcoin $158,000 target still in play

— Titan of Crypto (@Washigorira) January 20, 2025

Altcoins Market Sees Strong Recovery

The total value of crypto market liquidations has skyrocketed to a staggering $1.24 billion, with Bitcoin contributing only $204 million according to Coinglass statistics. This implies that the alternative coin sector is experiencing a more significant correction, given the launch of the TRUMP and MELANIA meme coins.

Today, the cost of Ethereum has risen by 8% following yesterday’s purchase of a substantial amount of ETH coins by Donald Trump’s DeFi project, World Liberty Financial. This development is encouraging because it indicates that the Altcoin Season Index, which measures the relative performance of altcoins compared to Bitcoin, has climbed back above 50, suggesting a possible recovery for altcoins.

Popular crypto analyst Michael van de Poppe remains bullish on altcoins. He said:

Had an amazing weekend with TRUMP and a drop in altcoin values. I anticipate increased power for ETH, LINK, AAVE, and numerous other altcoins in the upcoming week as yields decrease and the USD weakens. Exciting times lie ahead!”

This version maintains the original meaning but uses simpler language and removes jargon to make it easier for a wider audience to understand.

Will Bank of Japan Play the Spoilsport?

On Friday, it’s expected that the Bank of Japan (BOJ) will increase interest rates, marking the highest levels in nearly two decades since the 2008 financial crisis. If this anticipated rate increase occurs, it would demonstrate the central bank’s gradual plan to raise rates, which are currently at 0.25%, closer to a goal of approximately 1%.

Over the course of two days culminating on Friday, I anticipate the Bank of Japan (BOJ) will elevate its short-term policy rate to 0.5%. This potential action would represent the first increase since last July and comes amidst less robust U.S. employment figures at that time, a move which, in turn, sparked considerable market volatility in early August.

In contrast to previous instances, the latest U.S. employment data indicates robustness, while core Consumer Price Index (CPI) is decreasing. Consequently, significant disruptions in Bitcoin and other cryptocurrencies seem improbable over the coming period.

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2025-01-20 15:11