The central banks of Japan, the United States, and the United Kingdom will announce their interest rate decisions this week, which may intensify the volatility of Bitcoin prices

Source: CoinWorld
Author: Web3 Scent Observation

Generally speaking, interest rate decisions are important factors at the macroeconomic level that influence the direction of cryptocurrencies. It is not difficult to observe that the price of Bitcoin tends to experience significant fluctuations before and after each interest rate decision.
In the next two days, the Federal Reserve, the Bank of Japan, and the Bank of England will successively hold policy meetings, releasing multiple macroeconomic policy data, interest rate decisions, monetary policy reports, and more. The interest rate decisions of these central banks will set the tone for the global financial markets, and investors need to closely monitor these decisions and their potential impacts.

Screenshot from: fx678
The Bank of Japan announced a 15 basis point interest rate hike today.
On July 31 (this Wednesday), the Bank of Japan announced its latest interest rate decision, raising the policy rate by 15 basis points to a range of 0.15%-0.25%. The interest rate decision was passed with a vote of 7-2, while the market had previously expected no change.
At the same time, the Bank of Japan announced a balance sheet reduction plan, decreasing the scale of government bond purchases by 400 billion yen each quarter, and will no longer provide a range for bond purchases but instead provide a specified amount.
After the announcement, the yen experienced significant short-term fluctuations against the dollar, with the USD/JPY dropping 110 points to 151.81. The exchange rate then quickly rebounded, reaching a high of 153.88, and is currently fluctuating around 153.20.
Analysts believe that the Bank of Japan pointed out that inflation risks are tilted to the upside for the next two years, which may be the reason for its actions. If this outlook proves correct, the Bank of Japan may further raise interest rates.
The Bank of Japan stated that starting from the first quarter of 2026, it will reduce the monthly bond purchase scale to 3 trillion yen. It plans to purchase 75 billion yen of Japanese government bonds with maturities exceeding 25 years twice a month in August and September (previously it was 50 to 100 billion yen twice a month).
Analysts are divided on whether the Bank of Japan will raise the policy rate from the current 0%-0.1% or signal an upcoming rate hike. Japan's inflation rate has been above the 2% target for some time, and although the yen has recently appreciated, the exchange rate against the dollar still hovers near multi-decade lows.
The Federal Reserve's decision early Thursday morning is crucial.
Next, the press conference by Federal Reserve Chairman Powell will be closely watched. The Federal Reserve will announce its interest rate decision at 2:00 AM Beijing time on Thursday, with investors focusing on the timing and frequency of rate cuts this year. While almost no one expects the Federal Reserve to begin cutting rates immediately, nearly everyone anticipates that the Fed will indicate it will cut rates at its next meeting in mid-September.
According to CME's "FedWatch," the market expects a 95.9% probability that the Federal Reserve will keep rates unchanged this week, with a 4.1% probability of a 25 basis point cut. By September, the probability of the Federal Reserve maintaining rates is 0%, with an 86.8% probability of a cumulative 25 basis point cut, a 12.8% probability of a cumulative 50 basis point cut, and a 0.4% probability of a cumulative 75 basis point cut.
As the anticipated rate cut by the Federal Reserve approaches, the global market will enter a significant adjustment period. If the Federal Reserve begins to cut rates in the coming months, it could lead to a weakening of the dollar and alleviate capital outflow pressures in emerging markets. This would have a positive impact on global economic recovery and financial market stability.

The Bank of England's interest rate decision is full of suspense.
Subsequently, the Bank of England will announce its interest rate decision at 7:00 PM Beijing time on Thursday. Economists and the interest rate market are roughly split on whether the central bank will ease policy for the first time in years. More certain is that even if the Bank of England does cut rates, it may indicate a very cautious approach, signaling to the market that it should not expect a series of easing policies.
Traders believe there is about a 60% chance that the Bank of England will lower rates from a 16-year high of 5.25% on Thursday, while earlier this month, after the UK released its latest inflation data, they believed this probability was 40%.
How will the Bitcoin market respond?
The interest rate decisions of major global central banks not only have a significant impact on traditional financial markets but also play an important role in the volatility of the cryptocurrency market and investor sentiment.
On July 31, according to CoinWorld market data, Bitcoin bulls attempted to hold the support level at $66,500 but failed in the early hours, leading to a drop to a low of $65,526 after noon, with bears seeking to test the strength of the $65,000 support level. As of the time of writing, the price of Bitcoin has rebounded to $66,205, with a 24-hour decline of 0.95%.

Unless unexpected circumstances arise, such as the Federal Reserve indicating that a rate cut in September is not certain, the central bank news this week may not have a significant impact on the price of Bitcoin (BTC).
However, in the long term, apart from the Bank of Japan, other major central banks are likely to gradually cut rates. This has become a new normal. In addition to the Federal Reserve and the Bank of England, the European Central Bank also cut rates earlier this summer, and the Bank of Canada has cut rates twice in the past few months. Generally speaking, loose monetary policy is favorable for risk assets like Bitcoin.
Although Bitcoin has risen 56% so far this year, mainly due to demand for US spot ETFs, part of the increase may be attributed to market expectations that Western monetary policy will shift from years of tightening to a period of easing.
Against the backdrop of market expectations for an imminent rate cut by the Federal Reserve, investors' risk appetite for the cryptocurrency market has increased. In particular, short-term Bitcoin call options have become more attractive. Meanwhile, Ethereum's implied volatility is slightly higher than Bitcoin's, but its market performance remains sluggish. This market pattern reflects the differences in investors' risk preferences and expected returns for different cryptocurrencies.
In summary, if major global central banks continue to adopt loose monetary policies, the Bitcoin market may be positively impacted, with prices expected to rise further. However, investors should remain vigilant about short-term market volatility and pay attention to the potential impacts of global macroeconomic policy changes on the cryptocurrency market.