Bitcoin could be affected by the rallying yen, as well as Japan’s highest bond yields for 30 years.
This week the 30-year yield on Japanese bonds rose to 2.345%, its highest value since 1994. At the same time, the U.S.-dollar yen strengthened to around 153.
Akira Otani is the former Bank of Japan chief economist. Goldman Sachs believes that the Bank of Japan may be on the verge of a major policy shift amid the rally of the Japanese yen.
If the yen gains further strength towards USD 130, the central banks could stop rate hikes or reduce their inflation projections for 2026. Analysts said that in their Monday report, a yen below 160 could result in tighter policy.
Crypto may feel the heat first, but global markets will be watching.
“Major shift” for risk assets
BitcoinThe risk of capital flight is increasing as Japanese yields continue to rise.
Institutional money is typically drawn away from speculative investments, such as Bitcoins that are heavily dependent on the liquidity of assets.
Agne Linge is the Head of Growth for WeFi, a decentralized bank. She told Decrypt.
Beyond institutional rotation, Linge warned of a more structural consequence, “The yen carry trade thrives when investors borrow yen at a cheaper rate… With bond yield soaring, the need to take the yen to invest in other assets is limited.
Some analysts believe that Bitcoin’s recent trading stability at around $85,600 could be affected if Japan tightens up further.
Aravanan Pandian is the CEO and founder of KoinBX. Decrypt It is no secret that historically, the BOJ’s loose policy was a key factor for global risk appetite. It may soon change.
If the BOJ stops or dramatically tightens up its yield curve (YCC) control, there could be significant capital repatriation from cryptoassets,” said he. A stronger yen is a sign of risk-off, historically. It tends to reduce speculative investments across all portfolios.
A Yield Curve control is a tool that allows the central banks to set specific rates of interest for long term by purchasing or selling bonds.
Pandian said that the ripple effect of a Japanese shift in policy could go far beyond cryptocurrency. It could also “trigger an even wider rethinking about central bank autonomy, global debt sustainability and other issues,” he added.
Not everyone is predicting the demise of digital assets. Federal Reserve faces mounting pressure from the public to lower rates due to a slowing CPI and PPI, which could offset Japan’s aggressive tone.
Speaking with DecryptMarcin Kazmierczak is the co-founder of RedStone and its COO. He compared this moment to 2016, when Japan’s Bank of Japan tightened up. “Bitcoin dropped by 15% at first, but rebounded strongly in six months,” said Kazmierczak.
Is it a temporary setback?
Kazmierczak has claimed that despite Goldman Sachs’ warning that an increase in the yen would lead to more capital leaving digital assets, it is still a much stronger market than previous cycles.
Bitcoin’s 21-million coin supply cap positions it as the only currency that can withstand these changing monetary policy changes, said he. He suggested that this current decline may be “temporary” rather than “structural.”
While Japan's policy path is in focus, U.S. economic signals also weighed on sentiment. Bitcoin prices rose on Monday as investors digested the rising expectations of inflation and risks associated with recession.
Fed Survey: Consumers expect inflation of 3.6% over next year. 44% anticipate higher unemployment. This is the most anxious level since April 2020.
According to CoinGecko, Bitcoin currently trades at $85,210. This is up by 0.6% in the last 24 hours and an 8.2% increase over the previous week.
MYRIAD is a decentralized market for prediction launched by DecryptDASTAN, the parent company of, was cautiously optimistic on Tuesday. 55% expected Bitcoin to reach $85,000 before Wednesday.
