In a notable shift in the cryptocurrency market, Bitcoin and ether surged past significant technical thresholds on Friday, buoyed by rising Asian equities. This uptick coincided with the Bank of Japan’s decision to increase interest rates to their highest point in thirty years, alongside the release of cooling U.S. inflation data that rekindled interest in risk assets.
During trading in Asia, Bitcoin climbed above $87,000, while ether also made gains in line with the overall strength of the market. Investors appeared to overlook the Bank of Japan’s long-anticipated rate hike, instead choosing to focus on the overall improvement in global financial conditions.
Several other cryptocurrencies, including Cardano’s ADA, Solana’s SOL, Dogecoin (DOGE), Binance Coin (BNB), and XRP, each saw increases of up to 3%. This upward trajectory contributed to a 2% rise in the CoinDesk 20 index, reflecting a broader positive trend across digital currencies.
The rise in cryptocurrency values followed a session marked by volatility and a relatively confined trading range. In the last 24 hours, the market witnessed over $576 million in liquidations, predominantly affecting long positions. Data from CoinGlass indicated that this wave of liquidations highlighted the crowded positioning that had developed amid recent market rebounds, with high leverage being a common strategy despite limited gains.
In Japan, the yield on 10-year government bonds momentarily hit 2% for the first time since 2006, a direct result of the central bank’s rate increase—a decision widely expected following consistent hawkish signals from Governor Kazuo Ueda. Instead of causing panic, the news was absorbed seamlessly by the market. The yen experienced a dip while Asian stock indices gained ground, with the MSCI Asia Pacific Index rising by 0.7%, led by an uptick in technology shares. Futures linked to U.S. equities also showed signs of recovery, with the S&P 500 increasing by 0.8% and the Nasdaq 100 rising by 1.5%. This rebound was further supported by a positive outlook from Micron Technology, alleviating concerns over artificial intelligence spending and lofty market valuations.
Softer U.S. inflation data added to the encouraging risk sentiment, reshaping forecasts that the Federal Reserve might consider rate cuts in the near future. On-chain analytics suggest that pressure might be subsiding as well, with long-term Bitcoin holders nearing the end of a lengthy selling period. About 20% of Bitcoin’s supply has been reintroduced into circulation over the last two years, according to K33 Research.
However, despite the recent rally, traders remain wary. The latest price increases appear to be driven more by macroeconomic relief than by firm market conviction. As the year draws to a close, there are concerns that the cryptocurrency market may face heightened volatility due to diminished liquidity and persistent levels of leverage, keeping traders on alert for potential sharp movements.
