As per a CNBC report, Japan’s stock markets hit an eight-month low on Friday, as they declined for two straight days after the Bank of Japan raised benchmark interest rates to their highest level since 2008.

BoJ Raises Interest Rates By 15 Basis Points

On Wednesday, the Bank of Japan (BOJ) raised interest rates by 15 basis points to 0.25% in its second hike this year and announced plans to taper its bond buying. Traders expect more rate hikes to come later this year as the central bank tries to contain inflation, as per a report from CNN. 

The hike has narrowed the difference in interest rates between the United States and Japan, which pushed the Japanese yen higher against the greenback. The dollar has fallen by more than 4% against the Japanese currency since the middle of last month.

The Nikkei 225 fell 5.81% to end at 35,909.7, marking its worst day since March 2020, according to Factset data, and dropping below the 36,000 mark for the first time since January. The broader Topix saw a larger loss of 6.14%, marking its worst day in eight years and closing at 2,537.6.

XRP Price Slump Follows Japan’s Banking Crisis

Coming to XRP, despite ending July on a high note, XRP’s price has remained low over the past few days, with levels still below the $0.7 mark. There have been stakeholder concerns over the continued poor performance of XRP in the broader crypto space. The significant price slump seems to be connected to the ongoing banking crisis in Japan.  

The banking sector in Japan specifically has been facing challenges from around mid-July, when the Bank of Japan decided to carry out interventions in the forex market as a measure to control the falling yen. Notably, the FX rate was tethering near 162 yen/U.S. dollar, and the bank’s intervention was necessary to prevent it from slipping below the level. 

The intervention included going after lightweight hedge funds by trading against them, but the currency slipped to approximately 157.5 yen/dollar recently. The Bank of Japan deployed similar measures against heavyweight speculators, resulting in severe liquidations as they resorted to selling their positions.

This impacted the asset managers as brokers began selling massively. Given that the top allies of Ripple Labs and, by extension, XRP, like SBI Holdings, Mitsubishi UFJ and others have established businesses in Japan, they have had to take the hit.

Therefore, selling off their positions to stay afloat explains the dumping of XRP shares onto the market. 

Investors Anticipate Bullish Rally For XRP

Analysts believe this might be a significant factor in the recent price slump of the asset, despite promising predictions for XRP. The cryptocurrency has been on a six-year run of consolidation within a symmetrical triangle, which usually precedes a bullish rally.

Investors in the XRP community, anticipate a price rally that could lift XRP to the $0.9 to $1 level. Getting XRP to cross these resistance levels seems like a difficult task at the moment, given the banking chaos in Japan. As of the time of writing, XRP has dropped by a massive 5.18% to $0.5763 within the last 24 hours. 

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