Bitcoin price suffered a harsh reversal on Monday, wiping out some of the gains made last week when it soared to $93,000.
Summary
- Bitcoin price dived below the important support at $85,000.
- The Bank of Japan’s central bank governor pointed to a rate hike.
- A hike when the Fed is cutting may lead to unwinding of the carry trade.
Bitcoin (BTC) token dived to $84,880, triggering a broader crypto market crash that affected most altcoins. The market capitalization of all coins dropped by ~8% to $2.9 trillion.
One potential reason why Bitcoin price crashed is a sudden flip by the Bank of Japan. In a statement, Kazuo Ueda, the bank’s governor, said that the bank will consider the pros and cons of raising by examining the economy, inflation, and the financial market at home and abroad.
As a result, the Japanese yen rebounded, while government bond yields rose, with the 10-year hitting a multi-decade high of 1.876%. The Nikkei 225 and Topix indices dipped.
A BoJ rate hike will be notable because it will occur while the Federal Reserve is cutting interest rates. This divergence may push investors to unwind their carry trade, which happened last year when the BoJ started to hike interest rates.
The actions by the BoJ are important because it is the second-biggest central bank globally in terms of assets. It has over $5.8 trillion in assets, second only to the Fed, which has $5.14 trillion.
Bitcoin price is also falling as market participants adjusted their positions after last Friday’s options expiry, worth over $13 billion. It is common for the coin to be more volatile before and after such a big expiry.
There are other reasons the BTC price crashed, including rising liquidations and exchange-traded fund outflows.
Bitcoin price technical analysis
BTC price chart | Source: crypto.newsThe BTC price has been in a downtrend since forming a double top at $124,630 and a neckline at $107,270. A double top is a typical bearish reversal pattern.
The coin has formed a series of lower lows and lower highs. It also formed a death cross, a pattern in which the 50-day and 200-day moving averages cross.
On the positive side, there are signs that the coin is forming a double-bottom pattern at $80,637 and a neckline at $93,065. Therefore, the coin may still rebound as long as it remains above the double-bottom at $80,637.
Source: https://crypto.news/is-the-sudden-boj-flip-causing-bitcoin-price-crash/
