Bitcoin Chops Around $64K, With Japanese Yen’s Tumble Maybe Signaling ‘Currency Turmoil,’ Analyst Says

As an analyst with a background in traditional financial markets and a growing interest in cryptocurrencies, I find the current situation intriguing. The Japanese yen’s sudden devaluation against the U.S. dollar, reaching its weakest point since 1990, has left many market observers on edge. While Bitcoin and other cryptocurrencies remained relatively calm during this volatile day, potential consequences could be on the horizon.

On a tranquil Friday, the unpredictable world of cryptocurrencies saw a remarkable calmness as the Japanese yen plunged to a new 34-year low versus the US dollar, leaving analysts in conventional markets pondering the possible repercussions.

The Japanese yen (JPY) experienced a significant decline of 1.3% in value during the day, marking a large shift for a major currency. This drop brought the JPY to its lowest point against the U.S. dollar since 1990. The Bank of Japan (BOJ) chose not to alter interest rates from their near-zero levels and showed little concern regarding the weakening currency. In contrast, the U.S. economy continues to thrive with robust growth and persistent inflation, diminishing prospects for any monetary policy relaxation this year.

“Quinn Thompson, founder of Lekker Capital, expressed his surprise over recent significant currency shifts to CoinDesk, predicting potential interventions or collaborative actions from relevant authorities within the upcoming weeks if these trends persist.”

In her email interview, Noelle Acheson, a crypto market analyst and author of Crypto Is Macro Now, explained that the yen’s devaluation hasn’t affected crypto markets as of now. However, this situation could shift if the Bank of Japan (BOJ) decides to intervene and support the currency. Such intervention would involve the BOJ selling U.S. dollar assets (specifically, U.S. Treasuries) in exchange for yen. A weaker U.S. dollar resulting from this action might theoretically boost crypto prices.

One potential solution comes in the form of U.S. policymakers introducing more liquidity into the markets. This move could bolster the value of risk assets like cryptocurrencies, according to Lekker’s Thompson.

As a crypto investor, I can interpret Acheson’s statement as follows: If U.S. treasuries are collectively sold to bolster local currencies, it may lead to an increase in U.S. yields and inflationary pressures in other regions. This currency instability could prompt corporations and even sovereign entities to purchase safe-haven assets like gold and bitcoin as hedges against potential losses.