Crypto responds to Trump’s Executive Order and Japan’s rate hike

The Bank of Japan’s decision to double interest rates from 0.25% to 0.5% impacted the crypto market, though less significantly than the reaction in late July 2024. This rate hike, bringing interest levels to a 17-year high, appeared to be largely anticipated by the market, tempering the response of risk assets.

As mentioned in previous updates, corrections in Bitcoin are expected even during bull runs. However, it is encouraging to see signs of market maturity, leverage mitigation and reduced liquidity-driven reactions in such scenarios.

Market Highlights

Trump’s crypto executive order

Trump signed an EO titled ”Strengthening American leadership in digital financial technology”, following SEC’s new crypto task force.

This suggests a shift to a pro-crypto administration and a pivot in digital asset policy. It also showcases new US efforts to foster innovation and clarify its regulatory landscape.

US BTC ETFs more valuable than ever

After a seven-day inflow streak last week, BTC ETFs reached their highest value yet with over $123 billion in total net asset value.

This could be seen as a response to Trump’s executive order, highlighting the importance of the regulatory clarity that comes with it.

Assets resistance despite BoJ’s new rate hike

Assets avoided a meltdown after the Bank of Japan increased interest rates to the highest level since 2008, going from 0.25% to 0.5%.

This contrasts to last August’s meltdown and could indicate a more favorable environment. With less leverage in the system, the impact on liquid markets like crypto is likely to be lower during periods of stress.

Market Metrics

Trump’s executive order and other regulatory developments were overpowered by the BoJ’s rate hike, causing the NCITM (-1.7%) to close the week with a slight decline. However, it’s performance still leads other major asset classes, followed by EWZ (+8.1%) and Gold (+5.3%). This reinforces the notion that crypto has volatility even in the midst of bull runs, an important feature as this asset class matures.