Bitcoin Holds Steady as Gold Hits All-Time High; Rising Inflation in Tokyo Boosts Expectations for BOJ Tightening

Bitcoin (BTC) remains relatively stable, just shy of its record highs, while gold (XAU) continues its ascent to new all-time peaks amid concerns about global risk, and Tokyo inflation increases, fueling speculation about potential rate hikes by the Bank of Japan (BOJ).

Bitcoin Consolidates as Tariff Concerns Weigh on Risk Assets

Bitcoin is trading around $104,400, just under its all-time peak of $109,000. Despite the broader market rally, the cryptocurrency’s price stalled as President Trump’s threat of imposing tariffs on Mexico and Canada, scheduled to begin on February 1, dampened investor sentiment across risk assets.

Although some market participants predict a potential pullback before BTC moves toward the $250K range, data from the onchain derivatives market paints a different picture.

“The market’s pessimism about a BTC dip before a rally is unfounded,” said Nick Forster, founder of Derive.xyz, a decentralized platform. “There’s a mere 9.7% chance of BTC falling below $75K before March, and even less likelihood—just 4.4%—of BTC reaching $250K before September.”

Meanwhile, options activity on platforms like Deribit and CME remains bullish, with continued interest from institutional investors signaling potential for further price growth.

Gold Surges to Record Levels Amid Growing Safe-Haven Demand

Gold hit an all-time high of $2,799 per ounce on Friday morning, marking a 6.5% increase for the month. A surge in demand from central banks, particularly for gold borrowing, and concerns over tariffs are fueling gold’s rally.

Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, observed that gold’s rise against major fiat currencies indicates growing fears of currency debasement and may further strengthen the case for alternative investments like bitcoin.

Gold-backed tokens also saw a lift, with Tether Gold (XAUT) reaching a record price of $2,796 on Bitfinex. Similarly, PAX Gold (PAXG) briefly tested highs above $2,800.

Tokyo Inflation Soars, Strengthening BOJ Rate Hike Expectations

Tokyo’s inflation data showed a sharp increase, with core inflation rising 2.5% year-over-year in January. The inflationary trend supports expectations for additional tightening from the Bank of Japan (BOJ), which recently raised its policy rate to 0.5%—the highest in over 16 years.

The possibility of a stronger yen resulting from BOJ actions could lead to a shift away from riskier assets, as witnessed in August 2024. In the forex market, AUD/JPY, a key indicator of global risk sentiment, has broken below a consolidation range, suggesting further downside for risk assets and the potential for more defensive positioning.