Experts predicted the growth of BTC volatility by the weekend

The Bank of Japan is expected to loosen its grip on bond markets, which could affect the global industry, exchange rates and liquidity conditions. Analysts note that the digital currency market has always been sensitive to such changes.

The Bank of Japan (BOJ) has recently implemented a soft liquidity support policy in hopes of reducing inflation. Several investment banks are reporting that controls on bond markets will indeed be loosened, as has been discussed in recent weeks. Since September 2016, the BOJ has launched a yield curve control (YCC) program in which it has committed to buying government bonds to keep the yield on 10-year government securities at around 0%

The purchase of perpetual bonds has increased global liquidity and has been a major source of downward pressure on bond yields in developed economies, according to RBC Wealth Management. BNP Paribas researchers expect the Bank of Japan to widen the YCC corridor to 100 basis points. Earlier, the IMF urged Japan to abandon its yield curve control program to prepare for a possible increase in interest rates from the current -0.1%. The researchers note that in the past, bitcoin has had a negative correlation with bond yields, market volatility, the US dollar index (DXY) and global liquidity conditions.

Thus, possible decisions by the Bank of Japan on the YCC program and increased volatility in traditional markets could have similar implications for the digital currency. Experts predict an increase in BTC volatility by the weekend.