This post will examine how decisions of central banks can impact Bitcoin’s price because of intricate correlations between asset classes.

The Butterfly Effect Begins in Washington & Tokyo

The US Federal Reserve recently ended quantitative easing (QE), and promised to keep interest rates “extraordinarily low” for an extended period of time.

However, the QE spotlight has now been placed on the Bank of Japan (BOJ). They have decided to increase their bond purchases by a third. Further, the BOJ is not only buying bonds, but also stocks and real estate. Meanwhile, the Japanese pension fund announced it will increase its allocation to domestic and foreign stocks.

The Bank of Japan’s Impact on USD

On the tail end of this, global stock markets roared to the upside. The Japanese stock market(Nikkei) has reached a 7 year high and blasted through 14 year old resistance; it looks poised for more gains and to end its 25 year bear market. This has lead to the Yen declining to a 7 year low — all as an attempt to make Japanese multinational corporations more competitive.