Bitcoin price trades flat following Bank of Japan's hawkish policy move

Quick Take

  • Bitcoin’s price traded flat after the Bank of Japan announced it would loosen its yield curve control.

Bitcoin's price traded flat on Friday after the Bank of Japan announced a discrete way to tighten monetary policy in a move that jolted financial markets.

The world's largest digital asset by market capitalization rose 0.1% to $29,358 at 12:45 p.m. ET, according to CoinGecko. The digital asset has stayed within a narrow range between around $29,000 and $31,500 for over a month. 

The BoJ said it would “conduct yield curve control with greater flexibility, regarding the upper and lower bounds of the range and not as rigid limits." The decision signaled the possibility of higher interest rates for an extended period that could pose challenges for risk assets like bitcoin.

Bank of Japan loosens yield curve control

The BOJ's decision shook markets in Asia, with the Nikkei 225 seeing a dip of 0.4%. The Stoxx 600 in Europe opened lower, and government bond yields in the region increased.

Wall Street rose on Friday after a cooler than expected inflation reading. The personal consumption expenditures price index rose 3% from a year earlier in June, the smallest increase in more than two years.

The BOJ's policy move gives it room to make a 50 basis point rate increase on 10-year Japanese Government bonds, effectively ending the central bank's 0.5% rate cap. Ten-year yields climbed to around 0.57% after the announcement, the highest in nearly a decade. 

The move comes after the International Monetary Fund's chief economist Pierre-Olivier Gourinchas said Tuesday the BOJ should depart from yield curve control and prepare for future rate rises.

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