Bitcoin Passes the Yen Test: A Break from the 2024 Playbook
Japan's intervention in the foreign exchange market had a significant impact on the crypto market two years ago, but Bitcoin has managed to survive the yen shock this time around.
In August, Japan spent nearly $100 billion trying to strengthen its currency. Despite their efforts, the yen only strengthened 3.7% over three sessions without another confirmed rescue from Tokyo.
This matters for the crypto market because a similar surge in the yen in August 2024 forced investors to unwind cheap yen-funded trades and dump risk assets, including Bitcoin. As a result, BTC fell by as much as 20% along with Ethereum.
This time around, however, Bitcoin has held above $79,000, close to its highest level since May. This makes Monday's move an important break from the 2024 playbook.
The Bank of Japan is likely to raise interest rates in September and keep hiking at a pace of once every quarter until January 2027, according to economic adviser Takuji Aida. The remaining question is how fast the yen will continue to rise. Bitcoin has survived the first shock, but a more violent move would be the real test.