Last week, the Asian stock market saw one of its biggest declines in the past decade.The main reason for this collapse was the unexpected interest rate hike by the Bank of Japan on July 31, which created shock waves through financial markets.
This decision triggered a sell-off, particularly in Japan, where The Nikkei 225 index plunged 12.4%, its worst single-day drop since Black Monday in 1987. Other major indexes in the region, including South Korea’s Kospi and Taiwan’s Taiex, also saw substantial declines.
As explained by the governor of the Bank of Japan (BoJ)Kazuo Ueda, The move came as the fundamentals of Japan’s economy are relatively solid, with gradual price increases accompanied by wage rises, despite concerns that personal spending would hold up as prices rose.
Ueda added that further rate hikes are possible this year, although like his Western counterparts he declined to commit to a specific date. Everything will depend on how the economy continues to advance, including how the latest moves in Japanese monetary policy are reflected in the economy.
What was the reaction of the crypto markets?
Cryptocurrency markets were hit hard by the Bank of Japan’s move.
Cryptocurrencies such as Bitcoin and Ethereum experienced sharp declines. Bitcoin, for example, fell 15% in 24 hours, while Ethereum dropped 22%. This drop was partly due to the strong correlation between the stock market and the cryptocurrency market, where a drop in one often leads to a sell-off in the other.
Claudio Cossio Meta Pool co-founder stated: “We are experiencing a situation of revaluation of digital assets, due to the rise in interest rates by the Central Bank of Japan, as well as the sale of BTC from MtGox; however, we have seen an increase in transactions and wallets created in the ecosystem.”
The crash highlighted the volatility and interconnectedness of global financial markets. Investors, already nervous about economic uncertainties, reacted quickly to the stock market crash by liquidating their cryptocurrency holdings, causing prices to fall even further.
Maria Fernanda Juppet, CEO of CryptoMKT He explained that amid the market collapse, large investors known as crypto whales took advantage of the situation to acquire various cryptocurrencies such as Bitcoin, Ethereum, and Solana, among others, when they saw an opportunity that lay in the temporary decrease in prices.
In summary, The Asian stock market crash last week had a profound impact on global financial markets, including the cryptocurrency sector. The events highlighted the interconnectedness of different asset classes and the challenges cryptocurrencies face in achieving stability.
Source: Ambito
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