Japanese Yen, US Yields Pose Biggest Near-Term Bitcoin Risk: Analysts
A stronger yen could accelerate the unwinding of carry trades, putting stocks and crypto under pressure at the same time.
ByWayne Jones
Bitcoin (BTC) is heading into one of its most consequential weeks of the year so far, with the Federal Reserve announcing its September rate decision on Wednesday and the Bank of Japan following two days later.
Markets are pricing in roughly an 85% chance of a 25-basis-point Fed hike, and the real question isn’t whether rates move but how hawkish both central banks sound once they do
Fed, BOJ, and a Trade Threat Collide
XWIN Japan laid out the scenario that worries it most: US yields and the yen rising together. Higher US rates tighten global liquidity, and a stronger yen risks speeding up the unwind of yen-funded carry trades, pushing investors to cut risk across stocks and crypto at once.
Brent crude has traded above $100, and the US 10-year yield has approached 5%, keeping inflation worries alive going into the decision. Once the meetings pass, XWIN wants traders watching US yields, USD/JPY, spot Bitcoin ETF flows, and underlying demand, since, according to them, that’s where the real test begins.
As CryptoPotato reported previously, the setup shifted fast, with August payrolls coming in at 162,000, triple what economists expected, and producer prices accelerating to an annual 5.4%. Last week’s CPI print confirmed headline inflation at 3.4%, and BTC reacted, sliding from about $82,400 to under $78,000 since Fed Chair Kevin Warsh’s Jackson Hole speech and the hot data that followed.
Tuesday brings its own catalyst too, a Senate cloture vote on the CLARITY Act that needs 60 votes to advance.
There’s a political wrinkle too, as a result of President Donald Trump threatening to stop trading with countries running a US trade deficit if the Fed didn’t cut rates, and markets are now leaning toward a hike instead, which is the opposite of what he wants.
