Yen surge, rising bond returns can threaten bitcoin while boj weighs policy shift

A meeting of Yen and the highest Japanese bond returns in 30 years send warning signals in the global markets, and Bitcoin cannot be saved.

This week the 30-year bond return from Japan rose to 2,345%, the highest level since 1994, while the Yen gathered against the US dollar at around 153.

Goldman Sachs analysts led by former Bank of Japan (BoJ) Chief Economist Akira Otani are of the opinion that the bank can approach a policy spivot in the midst of the Yen’s Rally.

If the yen further strengthens to 130/USD, the central bank could pause the increase and reduce its inflation for 2026. A weaker yen after 160 could meanwhile enforce a tighter policy, the analysts said in a Monday report.

Anyway, global markets look closely and crypto is perhaps one of the first to feel the heat.

“Great shift” for risk assets

BitcoinThe thriving in environments of surplus liquidity is confronted with the risk of capital rotation as Japanese yields increase.

Higher income returns and tightening policy usually leave institutional money away from speculative assets, especially those such as Bitcoin that are highly dependent on liquidity conditions.

“The macro-economic trends in Japan, indicated by the current increase in the 30-year bond return, signal an important shift for risk provisions,” said Agne Linge, head of growth at decentralized Bank Wefi toldypt.

In addition to institutional rotation, Linge warned of a more structural consequence, “The yen wears trade when investors borrow yen with a cheaper rate … with the proceeds of bonds, the need to take the yen to invest in other assets is limited.

Other analysts say that the recent stability of Bitcoin, which acts near $ 85,600, may not hold when Japan continues.

Aravanan Pandian, CEO and founder of Crypto Exchage Koinbx, said Decrypt That the historically loose policy of the BoJ has been an important pillar of the global risky appetite. That can change.

“If the BoJ ends or drastically makes his yield curve control (YCC) drastic, there can be a significant repatriation of capital, in particular of crypto assets,” he said. “Historically, risk-off sentiment is indicated by a stronger yen, who tends to lower speculative exposure in portfolios.”

Executive Curve Control (YCC) is a policy instrument in which the central bank focuses on specific long-term interest rate by buying or selling government bonds.

Pandian also said that a Japanese policy shift could rip far beyond the crypto and “a broader reconsideration of the autonomy of the central bank and the global debt of the debt could cause,” he said.

Yet not everyone sees Doom for digital assets. The Federal Reserve is confronted with the increasing pressure to lower the rates, in the midst of cooling CPI and PPI growth, which may compensate for the ragless tone of Japan.

While speaking with DecryptMarcin Kazmierczak, co-founder and COO of Modular Oracle Redstone, pointed to historical precedent from 2016, when the Bank or Japan last turned to sharpen, as a similar moment, “Bitcoin initially dropped 15% within six months,” he said.

A temporary blip?

Although Goldman Sachs analysts have warned that a stronger yen could lead to a capital flight of digital assets, Kazmierczak argued that the cryptomarkt is much more robust than in earlier cycles.

“Bitcoin’s 21-million-coin-coin capture continues to position unique against this changing monetary policy,” he added, suggesting that the current decline “can be temporarily structural”.

Although Japan’s policy path is in focus, US economic signals also weighed on sentiment. Bitcoin saw an increase on Monday, while investors consumed increasing inflation expectations and recession risks.

A FED survey showed that consumers expect 3.6% inflation the following year, with 44% anticipating higher unemployment, which marks the highest anxiety levels since April 2020.

From now on, Bitcoin acts around $ 85.210, an increase of 0.6% in the last 24 hours and the increase in the last week of 8.2%, per data from Coingecko.

Predictors about countless, the decentralized prediction market launched by DecryptThe parent company Dastan seemed careful on Tuesday, with 55%, Bitcoin expected to hold $ 85,000 until Wednesday.