Three central banks are about to tighten monetary policy simultaneously for the first time since 2006. The European Central Bank has already raised rates to 2.50% and decisions from the Federal Reserve and the Bank of Japan are expected this week. In 2006, this tightening caused drops of 7.7% for the S&P 500, 13.3% for the Euro Stoxx, 16.5% for the TOPIX, and more than 20% for emerging markets. In August 2024, Bitcoin fell 20% when the Bank of Japan raised rates, placing it in the category of assets most vulnerable during a tightening cycle. However, US spot Bitcoin ETFs received $3.52 billion in August, a buying flow that could cushion the impact of this week’s rate decisions.
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