Stronger Yen Bets Put Bitcoin at Risk

Hedge funds are placing bets on a stronger Japanese yen, which could have implications for Bitcoin (BTC) if it continues to rise.

The data from the Chicago Mercantile Exchange (CME) Group shows that investors are buying up put options with strike prices below 150, with some longer-dated trades targeting as low as 140. The dollar-yen pair has already fallen by almost 5% in recent weeks and is now trading near 153.44.

The strengthening yen is due to rising Japanese inflation and hawkish signals from Bank of Japan Governor Kazuo Ueda and board member Hajime Takata, which has triggered a shift away from carry trades. This could lead to higher borrowing costs for investors who have borrowed yen to fund dollar-denominated crypto positions.

Nomura reports that macro funds are now concentrating on the 150 to 152 zone, with some longer-dated structures reaching toward 140. The Bank of Japan's September decision will be crucial in validating these bets and determining whether Bitcoin stays insulated from the stronger yen.