Bitcoin Survives Yen Shock as BOJ Faces Tightening Constraints

The Bank of Japan's efforts to strengthen the yen have been met with some success. In August, Japan spent nearly $100 billion trying to boost the currency, but it still failed to reach 154 against the dollar.

Despite this, traders managed to push the USD/JPY pair down from 160.39 on Wednesday to 154.50 by Monday, resulting in a 3.7% strengthening of the yen over three sessions.

This development is significant for the crypto market because a similar surge in the yen in August 2024 led to a forced unwinding of cheap yen-funded trades and a dump of risk assets, including Bitcoin.

However, this time around, Bitcoin held its ground above $79,000, which is close to its highest level since May. This could be seen as a stress test for the market, showing that it can withstand the pressure.

A key concern, however, is that Japan's foreign reserves fell by $94.6 billion in August, and selling US Treasuries to fund further intervention may attract pressure from the US.