Yen Intervention Sparks Carry Trade Unwind Jitters for Bitcoin
Bitcoin dropped over 2% in hours following US Treasury Secretary Scott Bessent's pledge to further support Japan's yen through coordinated intervention. The Japanese Ministry of Finance (MOF) and the Federal Reserve Bank of New York acted jointly last week, buying several trillion yen for the first time since 1998.
The MOF made aggressive purchases, while major banks such as Goldman Sachs and Morgan Stanley sold euros to buy yen on behalf of the US Treasury. Bessent stated that the coordinated foreign exchange actions countered disorderly yen movements, adding that the US will strongly support Japan's efforts to stabilize the yen.
However, investors became cautious over the potential unwind of carry trades that have supported Bitcoin, particularly after Bessent urged Japan's MOF and Bank of Japan to use the Fed FIMA Repo Facility to support the yen. The latest CFTC data confirms that net short positions in the Japanese Yen increased last week.