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The European Central Bank, the Federal Reserve, and the Bank of Japan are poised to tighten monetary policy simultaneously for the first time since 2006, creating a macroeconomic environment that historically precipitated sharp declines in leveraged assets.
This convergence poses a direct test for Bitcoin, which has previously experienced significant volatility during periods of rising interest rates and currency strength.
The European Central Bank raised its deposit rate to 2.50% on September 10, citing inflation pressures from the Middle East conflict that it expects will keep rates above target for an extended period.
Futures markets currently price the probability of a Federal Reserve hike at nearly 90%, with the decision scheduled for Wednesday. The Bank of Japan is expected to make its decision Friday.
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