Crypto breaks higher as BOJ decision clears a macro overhang

Market Overview - Bitcoin and ether experienced significant gains, with Bitcoin rising above $87,000 and ether also increasing, driven by positive sentiment in Asian equities following the Bank of Japan's interest rate hike and favorable U.S. inflation data [1][4] - The CoinDesk 20 index rose by 2%, with notable increases in Cardano's ADA, Solana's SOL, dogecoin (DOGE), bnb (BNB), and xrp (XRP), which saw gains of up to 3% [2] Liquidation and Positioning - Over a 24-hour period, more than $576 million in crypto liquidations occurred, primarily affecting long positions, indicating crowded positioning during the recent market rebound [2][3] - High leverage usage remains prevalent among traders, although it is primarily aimed at capturing small gains [3] Economic Indicators - Japan's 10-year government bond yield reached 2% for the first time since 2006 following the central bank's rate increase, which was anticipated due to prior hawkish signals from the Bank of Japan [3] - The decision to raise rates did not negatively impact markets; instead, it led to a weaker yen and a rise in Asian stocks, with the MSCI Asia Pacific Index gaining 0.7% [4] U.S. Economic Sentiment - Softer U.S. inflation data has bolstered risk sentiment, resetting expectations for potential Federal Reserve rate cuts in the near future [5] - On-chain data indicates that long-term Bitcoin holders are nearing the end of a prolonged selling phase, with approximately 20% of Bitcoin supply rotating back into the market over the past two years [5] Market Caution - Despite recent gains, traders remain cautious as the market's rebound is driven more by macroeconomic relief than strong conviction, leaving the crypto market susceptible to volatility as year-end approaches with lower liquidity and high leverage [6]