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As anticipated, Bank of Japan raises interest rates to 0.5%. How much of this was already priced in?
We saw major market pullback during the 0 -> 0.25% increase.
Will this impact the upcoming FOMC decision on January, 29th? A
My speculation is we see a short-term market pullback. Especially if US Fed elects to reduce interest rates (and therefore decrease the Gap between both economies and pressure it puts on yen borrowers).
๐ Gamestop / $GME ๐
If Trump and company continue to fast-track US crypto accessibility, think of this pullback as the spring that coils into a Gigasend crypto cycle between Spring and Fall of this year.
Euphoria is coming. This year.
NFA
THE BANK OF JAPAN RAISES RATES BY 0.25%, NOW TO THE HIGHEST LEVEL IN 17 YEARS.
The last time this happened in August of 2024, we had the Yen-Carry trade which spiked the $VIX up 600% in a day and caused equities to fall from 20-30%.
The reason for this was because traders were short the Yen to the tune of trillions of dollars and they had to cover their short by selling stocks.
Two reasons why Japan raising rates is not a big deal, and potentially a good thing:
- Yen Short float peaked in July as per CFTC data, everyone knew Japan would hike rates again and began deleveraging
- The USD $DXY is very strong, almost at 2022 levels. We need it to come down a bit, so one of the best ways for it come down...is if other countries raise rates to strengthen their currencies against the Dollar. A strong but not SUPER strong dollar is important for the United State's trade deficit -- countries don't want to buy from us if they have to pay so much because of how expensive our currency is.
USD/JPY right now reacting to this news, largely unchanged: