Bitcoin Trades At Slight Premium in Yen Terms Amid Suspected BOJ Intervention

The price of one bitcoin in Japanese yen on the major Japanese cryptocurrency exchange, bitFlyer, was approximately 0.2% higher than the price of one bitcoin in US dollars on Nasdaq-listed Coinbase (COIN), according to data from TradingView. BitFlyer has yet to provide a comment on this matter at the present moment.

As a crypto investor, I’ve noticed that the top cryptocurrency by market value has been trading at a premium in Japanese Yen (JPY) recently. This week, the premium reached as high as 1.49%, which is the highest it’s been since March 2020. This trend suggests that traders are seeking diversification into alternative assets to mitigate the volatility of the yen.

I, as an analyst at Kaiko based in Paris, have observed that the Bitcoin premium on Japanese markets currently hovers between 0.3% and 0.4%. This represents a significant decrease from the over 1% premium seen in mid-April and the yearly high of 1.7% reached in mid-March. However, this situation could shift. The escalating divergence in monetary policy expectations and geopolitical tensions are causing FX volatility to rise. This trend could potentially influence the crypto market as well.

In the understaffed Japanese financial market on Monday, the yen experienced significant volatility. It initially plummeted to a 34-year low of 160 pips versus the U.S. dollar, but later rebounded by approximately 500 pips to reach 155 pips per USD during the early European trading hours.

The swift and significant rebound of the yen triggered discussions about the Bank of Japan intervening or selling dollars to halt its decline. However, local reports were ambiguous regarding this possible intervention, attributing the sudden strengthening of the yen to the thin trading markets and wariness towards potential central bank actions near the 160-pip mark.

As a financial analyst, I would explain it this way: The yen’s appeal to investors has waned due to Japan’s mounting public debt, which hinders the Bank of Japan from aligning its interest rates with those of the U.S. In simpler terms, the Japanese fiscal crisis is manifesting itself in the foreign exchange market.

As a researcher, I’m here to provide you with accurate and clear information. This week, the Federal Reserve (Fed) is set to convene for a policy meeting. During this gathering, the Fed may emphasize the importance of maintaining the benchmark interest rate at 5.25% for an extended period due to persistent inflation.

Last week, the Bank of Japan (BOJ) decided against raising its benchmark interest rate from the current range of 0-0.1%. Having increased it above zero earlier in the year, the BOJ opted to maintain an ultra-loose monetary policy throughout the Fed’s tightening cycle in 2022 and 2023. This policy move motivated traders to sell the yen.