Nassim Nicholas Taleb, the author of books on uncertainty like “Black Swan”, “Antifragile” and others, has explained how exactly the Japanese market collapse developed which caused Bitcoin to crash during the past week.
Here’s what you should know.
The Japanese Nikkei 225 stock index plummeted dramatically after the Bank of Japan (BOJ) implemented an interest rate hike. Taleb highlighted that the BOJ had maintained zero interest rates for nearly 33 years and had introduced quantitative easing measures for the past 23 years. He emphasized that these economic strategies come with an eventual cost.
Taleb also criticized the notion that Japan’s quantitative easing strategy was successful.
“Japan was always mentioned by the QE fools as a place where the strategy worked.”
In contrast, the US has alternated between tightening and loosening interest rate strategies but still faces significant inflation.
As the BOJ considers further interest rate increases, global experts have criticized the central bank’s timing. Mari Iwashita, chief market economist at Daiwa Securities Co., suggested that Japan should wait to see the direction of the U.S. economy—whether it will enter a recession or achieve a soft landing—before making its next move.
Bitcoin and US Markets Plunge
The Japanese stock market’s turmoil quickly spread to the US markets and the cryptocurrency sector. Major US stock indexes fell sharply, causing Bitcoin to lose 18% in just a few days, dropping from $61,000 to $49,750. Bitcoin is currently trading at $55,210. Ether also saw a significant decline, falling 22% to $2,100, marking its biggest one-day drop since 2021.
Crypto is Suffering
The decline in digital asset prices affected crypto-related company stocks as well. Coinbase (COIN) fell over 9% in U.S. pre-market trading, while MicroStrategy (MSTR) saw a 13% drop.
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Meanwhile, Robert Kiyosaki, in the midst of the stock market crash, emphasized that the losses present a lucrative opportunity for investors to buy assets at lower prices. He advised viewing this downturn as a chance to accumulate wealth, predicting significant future gains in gold, silver, and Bitcoin.
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