Bank of Japan and People's Bank of China simultaneously apply 'tightening and regulation' pressure… virtual asset market weakness

Prices of major virtual assets (cryptocurrencies), including Bitcoin (BTC), are collectively showing weakness. Analysts say that the Bank of Japan (BOJ)'s signal of interest rate hikes and the People's Bank of China (PBOC)'s announcement of stablecoin regulations emerged simultaneously, weakening investor sentiment across global risk assets.

On the 2nd, Bitcoin was trading around $86,000, continuing a weak trend. The market interprets that the possibility of changes in Japanese monetary policy and China's regulatory tightening have prompted investors to move toward risk aversion.

First, concerns about a reduction in yen carry trades were highlighted as the BOJ publicly indicated the possibility of raising rates. BOJ Governor Kazuo Ueda said at a meeting on the 1st, "We will consider whether to raise rates at the next monetary policy meeting," raising prospects that the policy rate could be raised at the meeting on the 18th–19th of this month. As the yen strengthened, observations spread that demand for risk assets formed by 'low-interest yen' could decline in global markets.

Also, the actions of the People's Bank of China are cited as an additional burden. On the 29th of last month, the PBOC issued a joint statement with 13 government agencies, including the Ministry of Public Security, defining stablecoins as "illegal financial activities including risks of fraud, money laundering, and illicit capital movement." Hong Kong outlet the South China Morning Post (SCMP) evaluated it as "the first case in which China explicitly outlawed stablecoins."