Nassim Nicholas Taleb’s Insight on the Japanese Market Collapse

Nassim Nicholas Taleb, a risk analyst and author of books on uncertainty like “Black Swan” and “Antifragile,” has provided an analysis of the recent Japanese market collapse that affected Bitcoin.

Taleb’s Breakdown of Japan’s Market Crash

Taleb reflected on the drastic plunge of the Japanese Nikkei 225 stock index, which shocked both global financial observers and crypto investors. This crash led to a significant drop in Bitcoin’s value.

Recently, the Nikkei 225 experienced a severe downturn after the Bank of Japan (BOJ) implemented an interest rate hike. Taleb pointed out that Japan had maintained zero interest rates for 33 years and had engaged in quantitative easing for 23 years. He emphasized that such policies “come at a price you eventually must pay.”

Despite some experts lauding Japan’s QE strategy, Taleb compared it to the U.S., which has alternated between tightening and loosening monetary policies while facing soaring inflation.

With the BOJ contemplating further interest rate hikes, many experts, including Daiwa Securities’ chief market economist Mari Iwashita, criticized this decision as poorly timed. They argue Japan should first assess the trajectory of the U.S. economy.

Japan’s Impact on Bitcoin

The plunge in Japan’s stock market reverberated through U.S. markets, causing Bitcoin’s decline. Major U.S. stock indexes fell, leading Bitcoin to drop 18% within days, from $61,000 to around $49,750 before recovering slightly to $55,140.

Max Keiser, a Bitcoin advisor to El Salvador’s President Nayib Bukele, commented on the financial turmoil, suggesting that the Fed should maintain current interest rates to allow the market to stabilize further.

This article was originally published on U.Today.