- JPY=X
-0.61% - BTC-USD
+0.24%
Bitcoin under selling pressure amid Yen carry trade unwind risks.
US Treasury Secretary Scott Bessent pledging further yen intervention sparked investor caution.
CFTC data confirms increase in net short positions in the Japanese Yen.
Bitcoin pared earlier gains and fell more than 2% in a few hours amid a rare US-Japan joint intervention to buy Japanese yen for the first time since 1998. The drop comes primarily after the US Treasury Secretary signals further coordinated intervention.
US Treasury Sec Scott Bessent Vows More Yen Intervention with Japan
Japanese authorities and the US Treasury conducted joint Japanese yen buying last week, the first such effort in decades. Japan’s Ministry of Finance (MOF) intervened aggressively, with purchases of several trillion yen.
The Federal Reserve Bank of New York acted on behalf of the US Treasury to sell euros to buy yen through major banks including Goldman Sachs and Morgan Stanley. Strategists claim using euros rather than dollars avoids weakening the US currency.
“Friday’s coordinated foreign exchange actions countered disorderly yen movements,” said US Treasury Secretary Scott Bessent. He added that the US will strongly support Japan’s decisive market and monetary steps to stabilize the yen.
However, Treasury Sec Bessent pledging further yen intervention sparked investor caution over unwind of carry trades that have supported Bitcoin. He also urged Japan’s MOF and Bank of Japan to use the Fed FIMA Repo Facility to support the yen.
Meanwhile, President Donald Trump described the US intervention to support Yen as a sign of friendship. He added that it is also “good for the world economy.”
Bitcoin Falls Below $62,500 amid Carry Trade Unwind Jitters
BOJ raised interest rates to 1% in June and held steady in July, but these failed to support the Japanese yen’s strengthening against the US dollar. However, the latest joint intervention by the US and Japan pushed the yen to strengthen significantly.
The USDJPY pair has dropped to around 156.50 today, with the US dollar index (DXY) falling to 99.50. This sparked carry trade unwind jitters among investors and institutions, causing Bitcoin to drop.
The latest CFTC data confirms that net short positions in the Japanese Yen increased last week, while long positions dropped. Leveraged Funds were already heavily short the yen and continued adding to those shorts just before the joint US-Japan intervention
Oil prices dropped more than 6% to $79 per barrel after President Trump confirmed US-Iran peace talks would begin on Monday. However, this failed to trigger upside in Bitcoin price.
