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Analysis of the reasons for the BTC market crash on August 5, 2024
1. Main reason: Bank of Japan rate hike
On July 31, 2024, the Bank of Japan announced that it would raise the policy interest rate from 0% to 0.1% to 0.25%. This is the first rate hike since Japan ended its negative interest rate policy in March this year. This rate hike has had a significant impact on global financial markets. The following is an analysis of the reasons:
The impact of the Bank of Japan's rate hike
1. Interest rate gap
After the Bank of Japan's rate hike, the Federal Reserve said it was "open" to a rate cut in September. This interest rate gap makes the arbitrage behavior of borrowing yen to invest in US dollar assets unattractive.
2. Fund reflux
Many investors previously borrowed low-interest yen funds to invest in high-return assets such as US bonds and cryptocurrencies. As the Bank of Japan raised interest rates, the yen exchange rate soared 12% in a month, market funds began to flow back, and investors sold US dollar assets and turned to repay yen loans.
The following is a review of the historical crypto tragedy we reviewed before. Today, August 5, 2024, we witnessed another major event.
Today's "8.5 incident" is the first time that global financial policies have caused a plunge in crypto assets.
Reviewing the causes of previous plunges:
Mentougou in 2014: hacker attacks
"94" in 2017 and "519" in 2021: Chinese government suppression policies
"312" in 2020: epidemic
The bear market in 2022: Luna and FTX incidents caused investors to lose confidence
And today's plunge is because the Bank of Japan suddenly raised interest rates, and the crypto market and the Nikkei index moved in sync, with a cumulative decline of about 18% in 5 days.
The cause can be traced back to July 31, when the Bank of Japan raised the policy interest rate from 0%-0.1% to 0.25%. This is the first interest rate hike since Japan ended its negative interest rate policy.
Before this news was released, the crypto market was still affected by Trump's support for crypto. Subsequently, Bitcoin fell all the way and plummeted today.

Breaking news God bless the crypto world, Trump's shooting will trigger a shock in the cryptocurrency world. Fortunately, the bullet was just a miss and all financial assets will encounter a black swan! Please seize this shock opportunity and trade opportunities.
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