Bitcoin’s Death Cross May Mislead Bears, BOJ Eases Rate Hike

• Bitcoin’s impending ‘death cross’ may mislead bears as BOJ downplays rate hikes, supporting a potential bullish trend in the market.
• The BOJ’s decision to keep rates steady could benefit Bitcoin and other risk assets, contributing to a rise in market indices like the Nikkei.
• The unwinding of yen carry trades has led to Bitcoin’s recent price drop, impacting broader financial markets and causing risk aversion.

Bitcoin’s (BTC) imminent ‘death cross’ might once again mislead bears, as the Bank of Japan (BOJ) minimizes the risk of a near-term rate hike. Early Wednesday, BOJ Governor Shinichi Uchida stated the central bank would maintain current borrowing costs amid market instability. This stance weakens the case for further unwinding of “yen carry trades,” impacting risk assets, including Bitcoin.

Consequently, the death cross, a bearish pattern where Bitcoin’s 50-day moving average (SMA) drops below its 200-day SMA, may not have the expected impact. Bitcoin’s price briefly exceeded $57,300 after Uchida’s remarks, as the Japanese yen (JPY) fell to 148 per U.S. dollar (USD) from 145 per USD. Additionally, Japan’s Nikkei index surged by 4%, signaling a risk reset. Futures for the S&P 500 increased by 0.8%.

The yen carry trade involves borrowing cheap yen and investing in higher-yielding currencies or assets. This strategy gained popularity as the BOJ maintained low rates while other central banks, including the Fed, raised rates to fight inflation. Last Wednesday, the BOJ’s first rate increase in 17 years led to an unwinding of these trades, causing Bitcoin to drop from $66,000 to $50,000 within five days.

Market observer Global Macro highlighted that the BOJ’s decision to keep rates steady could support Bitcoin’s price. The Nikkei’s rise might influence major U.S. indices like the Nasdaq and S&P 500 to recover from recent declines. “The BOJ struck the ‘Yen put,’ and the Nikkei will drive the Nasdaq and S&P back to pre-selloff levels,” Global Macro noted on X.

Furthermore, Damped Spring Advisors’ Andy Constan explained that the recent unwinding of yen carry trades led to falling asset prices and margin calls for levered investors. This process exacerbates risk aversion and could affect broader financial markets.

Bitcoin’s price at the time of writing is $57,544.14, with a 24-hour trading volume of $45.18 billion. The cryptocurrency has risen by 4.50% in the last 24 hours, with a market cap of $1.14 trillion. Its circulating supply stands at 19,736,721 BTC coins, with a maximum supply of 21,000,000 BTC coins.