US Treasury Warns Banks of Potential Yen Intervention, Crypto Traders on High Alert

The US Treasury Department has notified banks to prepare for potential intervention in the yen market, a move that could have significant implications for crypto traders.

According to sources, the warning came after the Treasury's semi-annual currency report flagged 'excessive' volatility in the yen as undesirable. The report recommended the Bank of Japan normalize its monetary policies, which would involve rate hikes to close the interest-rate gap between the US and Japan.

The yen has been hovering around 160 per dollar, near multi-decade lows. Japanese authorities have already intervened to prop up their currency, but this is the first time the US Treasury has directly warned banks of potential intervention in over two decades.

The move could impact crypto markets, particularly Bitcoin, as it is often affected by carry-trade dynamics. When the yen strengthens, borrowers need to buy back the yen they borrowed, which means selling their assets and can lead to a wave of selling across risk assets.