The global crisis triggered by Japan on Monday caused sharp declines in many investment instruments, including cryptocurrencies. The unexpected interest rate hike by the Bank of Japan, combined with fears of recession in the US, the markets were almost in the red.

Shinichi Uchida, vice-president of the Bank of Japan, one of the influential and globally known names of the Bank of Japan, made statements that eliminated the possibility of an interest rate hike in the short term:

“Intense market volatility will of course change the Bank of Japan’s rate hike policy. We won’t raise rates when markets are unstable. We must maintain the current degree of monetary easing for the time being. We are watching the effects of the volatility in the markets. I think the reaction of the markets to a single US data is too much.”

After Uchida’s statements, the Nikkei index rose 3%. Bitcoin also rose above $57,000 after the announcement at night. The yen also depreciated against the US dollar.

What happened?

As it will be remembered, the Bank of Japan (BoJ) announced a system last week in which it announced that it would reduce its giant bond purchases and unexpectedly increased interest rates. Interest rates had risen to unprecedented levels in the last 15 years. Even if the interest rates were increased from 0.01% to a low rate of 0.25%, the impact of this on the financial markets was huge.

When these “hawkish” statements from Japan were combined with negative data from the USA, a ‘recession is coming in the USA’ panic occurred in the financial markets and investment assets were seriously sold. Bitcoin also dropped to the level of $49 thousand.

Central Bank Governor Ueda also signalled that further interest rate hikes could be made this year. Therefore, the serious reduction of this possibility by Uchida was also a factor that relieved the markets.