The crypto market has fallen to its lowest point in over five months, largely due to Japan’s stock market reacting to fears of a recession following a recent interest rate hike by the Bank of Japan.
Meanwhile, Bitcoin and Ethereum, the two biggest cryptocurrencies, have dropped significantly in the last 24 hours, with Bitcoin down 17% and Ethereum down 23%.
Japan Stock Market Triggers Crypto Crash
The decline in the crypto market mirrors a broader fall in stocks across Asia-Pacific. Japan’s Nikkei 225 index dropped by as much as 7%, continuing a downward trend that started last week when the Bank of Japan raised its key interest rate to the highest level in 16 years.
The Bank of Japan increased its interest rate to 0.25%, up from a previous range of 0% to 0.1%. This is the highest rate since 2008 and is part of a plan to tighten monetary policy, including cutting back on the purchase of Japanese government bonds.
Shortly after the market opened, the Nikkei index fell more than 2,400 points. Within an hour, it had dropped 12.3%, losing about 1,900 points.
Is a US Recession on the Way?
Many believe a US recession might be coming because the chances of a major economic downturn have increased.
Economist Peter Schiff says, “Central banks took big risks by keeping interest rates low for years, creating a large debt bubble. When inflation rose, higher rates burst that bubble. Now we have to face the fallout.”
The tech market is struggling, and the global economy is uncertain. On Monday, US stock futures fell sharply. Rising tensions between Iran and Israel are making the situation worse. This could also impact the cryptocurrency market as investors become more cautious.
Bitcoin (BTC) Price Fall
Bitcoin recently reached $70,000 but has now fallen to $50,350, a 17% decrease. In the last 24 hours, over $1.04 billion has been taken out of the crypto market. Out of this, $901 million came from investors who expected prices to go up, while $145 million came from those betting on prices going down.
Meanwhile, other cryptocurrencies, like altcoins, have also seen big drops. Ethereum’s price has decreased by 20%, and many top altcoins have fallen between 15-20%.
This is the largest single-day drop since April 13. It happens as global markets are declining, with investors losing faith in major tech stocks in the U.S. and around the world.
