- Bank of Japan raised its benchmark interest rate by 25 basis points to 0.75%, the highest since 1995.
- The announcement led to a sharp rebound in the cryptocurrency market, with total market capitalization surpassing $3 trillion.
- Bitcoin and other major tokens rose, with XRP outperforming peers due to improved retail sentiment.
- Despite the rate hike, central bank officials expect real interest rates to remain “significantly negative” and plan to maintain supportive financial conditions.
On Thursday night, the Bank of Japan increased its core interest rate by 25 basis points to 0.75%, the highest level set by the central bank since 1995. This move, which met economist expectations according to a Reuters survey, came as policymakers responded to long-term inflation and global market conditions.
Following the announcement, the cryptocurrency market responded with notable gains. Bitcoin quickly recovered from an intraday low, rising from around $85,200 to $87,000 in under an hour, representing a nearly 2% increase. As a result, the overall crypto market capitalization climbed above $3 trillion.
Ethereum and other leading digital assets also moved higher. Among major tokens, XRP recorded the strongest performance, climbing 3.3% in the hour after the decision. At the time, XRP traded at roughly $1.84. Data from Stocktwits indicated that retail sentiment around XRP shifted from “bearish” to “neutral” as overall discussion picked up.
Despite concerns that rising interest rates might suppress risk assets, many traders continued to add to cryptocurrency holdings ahead of the central bank’s statement. Some analysts described the crypto upturn as a possible “knee-jerk reaction,” given historical trends in response to tighter monetary policy.
Bank officials stated that, even with the new rate, real interest rates are expected to remain “significantly negative”. The central bank also emphasized it would continue to support economic activity by maintaining accommodative financial conditions.
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