Three Central Banks Tighten Simultaneously: What It Means for Bitcoin
The European Central Bank has already raised interest rates to 2.50%, and the Federal Reserve is set to decide on a rate hike on Wednesday, while the Bank of Japan will make its decision on Friday. This marks the first time since 2006 that three major central banks have simultaneously tightened monetary policy.
The last time this occurred in 2006, risk assets suffered significant losses over a short period. The S&P 500 fell by 7.7%, Europe's Euro Stoxx dropped by 13.3%, and Japan's TOPIX plummeted by 16.5%. Emerging markets were hit even harder, falling more than 20%.
Bitcoin, which did not exist in 2006 but has faced similar market conditions since its creation, fell as much as 20% when the Bank of Japan raised rates and the yen jumped in August 2024. However, this time around, Bitcoin held above $79,000 despite a significant squeeze on Japanese stocks, which have fallen by 8.4% in just one month.
The fact that Bitcoin had already de-rated before the rate hike suggests it may be more resilient to the current macroeconomic risks. Additionally, the introduction of US spot Bitcoin ETFs has provided a new source of capital for the market, with $3.52 billion flowing into these funds in August alone.