Japan: is the stock market crisis to blame for the decline in the crypto market?

From what has emerged, it seems that there is a correlation between the stock market crisis that Japan is experiencing and the collapse of the crypto market. 

And indeed, since Sunday, the Topix and Nikkei 225 stock titles in Japan have plummeted by over 7% while the Bank of Japan has increased the interest rate to 0.25%. At the same time, Bitcoin (BTC) has dropped to $49,000 and Ethereum (ETH) to $2200. 

Japan and the crypto market: stock market crisis and the price dump of Bitcoin and altcoins

Starting from Sunday, August 4, the crypto market is experiencing a real “nightmare” in terms of price collapse and, at the same time, also Japan is in a stock market crisis.  

And indeed, as reported by Bloomberg, just on Sunday, the Topix and Nikkei 225 stock indices in Japan plummeted by over 7% in morning trading in Tokyo. This is a loss of about 20% from the peaks of July 11, thus signaling a bear market in the Japanese stock world. 

“Japanese stocks are leading regional benchmarks. The Topix and the Nikkei 225 Stock Average have fallen by about 5%, with the former set for a three-day decline that would be the worst since 2011 and bring them close to bear markets. Winnie Hsu reports.”

At the same time, Bitcoin (BTC) experienced a significant dump, reaching the price of $49,000, something that hadn’t been seen since last April 13. Following this, Ethereum and other altcoins also plummeted, with ETH hitting $2,200. 

Yet, at the time of writing, the situation seems to be recovering. BTC is now worth $55,000, followed by ETH at $2,457. These prices are still in a dump of -18% and -26% respectively compared to seven days ago. 

Anche Solana è attualmente in dump di prezzo di -25% rispetto a sette giorni fa, con SOL che ora vale 137$. 

Japan and crypto market: the Central Bank raises interest rates to 0.25% 

A week ago, then, there was also the news that the Bank of Japan has increased the interest rate to 0.25%, compared to the previous range between 0% and 0.1% set at the end of last month.

It was precisely this seemingly innocuous move that triggered a cascade of events that ultimately caused Bitcoin and Ethereum to experience their bear market. 

Not only that, even the traditional markets have experienced a strong shake-up, with the S&P 500 index, a U.S. stock index, down more than 5% on the day.

Another consequence is then the surge in the value of the yen in the forex markets. Since July 31, the USD/JPY exchange rate has dropped from about 153 yen per dollar to 145. Suddenly, yen-denominated loans have become much more expensive.

In general, the Japanese stock market fell by about 12% on August 5, the worst one-day drop since 1987. 

Cryptocurrency investors on the rise

The correlation between Japan and the crypto market makes sense if you also consider that several surveys reveal that in Japan, the number of cryptocurrency investors is growing rapidly. 

First the Namura survey in June and then the Bitget one in July, confirm the same result. 

Specifically, from the report by Nomura it emerged that in Japan, the majority of institutional investors intend to become “crypto investors”, with 54% of respondents highlighting their intention to do so within the next three years.

Also, Bitget Research then revealed with its report that the crypto and Web3 market in Japan records over 350,000 daily tradings.

The Bitcoin Fear&Greed index plummets

Today, it was revealed that the crash of Bitcoin is causing panic among the crypto-community. Specifically, yesterday, the Fear&Greed Index plummeted to 34, which is orange with a lot of fear. 

However, this score dropped further today to 26, indicating that there is increasing fear and panic among crypto investors. 

At the moment, the most updated score of the Index dates back to 9 hours ago, having dropped to 17.