Data from Cointelegraph Markets Pro and TradingView showed BTC/USD returning to near $17,000 after dropping more than 3% during December 19.

The largest cryptocurrency has benefited from the rapid weakness of the US dollar, and this comes on the back of a sudden policy adjustment from the Bank of Japan (BoJ).

Long a deflationary environment with ultra-low interest rates, Japan woke up to a dramatic change today as policymakers raised the ceiling for bond yields. The yen immediately rose against the dollar, while Japan’s Nikkei fell.

In response, Bitcoin analysts weren’t thrilled at all despite the short-term benefits for BTC/USD.

They said that Japan, which seemed to be following the lead of the United States in its attempt to tame inflation, unleashed a can of worms that only appeared later.

“This is what happens when you artificially surprise the free market,” tweeted Arthur Hayes, former CEO of BitMEX, who likely intended to write “funnels” rather than “surprises.”

“It blows up in your face. We expect the 10-year Japanese government bond yield to trade at a 0.50% yield cap once US dollar liquidity defaults in the first quarter of 23.”
Hayes had previously written about central banks’ practice of yield curve control (YCC), which he said at the time was irreversible once initiated.

Another post, meanwhile, focused on the Bank of Japan’s ownership of Japanese bonds, which now exceeds 50%. He said that this scenario is reminiscent of the last days of the defunct FTX exchange.

“It is as if the Bank of Japan is taking lessons from [former FTX CEO Sam Bankman-Fried],” Hayes wrote.

“When you own more than 50% of a market, is it a market anymore? FTT dollars = JGB dollars.”

10-year Japanese government bond yield chart. Source: TradingView
Other responses were no less blunt in their assessment of the Bank of Japan, with Marty Bennett, founder of crypto-media company TFTC, likening the move to “pulling Leroy Jenkins out of the global financial system.”

“A simple policy adjustment has huge ramifications that will take weeks to take effect,” Christian H. Cooper, portfolio manager, added.

“The Bank of Japan was another low-yielding throwaway and now that’s changing. Prices higher, stocks lower (for weeks), + chaos.”
The dollar is facing a “perfect storm”
The Japan story fed into the already strong narrative about the dollar’s strength, as it hit a six-month low earlier in December.

Popular analytics account Tedtalksmacro summed it up: “The perfect storm has formed at the top of DXY.”

Related: BTC Price Faces 20% Drop in Weeks If Bitcoin Avoids Key Level – Analyst

Thus, the US Dollar Index (DXY) abandoned its bid for a sustainable recovery on intraday timeframes, falling to lows under 104 on the day.

“Major central banks are now playing catch-up with the Fed, including the most pessimistic bank -> Bank of Japan. The race to tame inflation outside the US is on, and it looks like the US has already done so.”

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