As the yen strengthens rapidly, expectations of a BOJ rate hike and the unwinding of yen carry trades are gaining momentum. The developments could weigh on Bitcoin in the short term.
USD/JPY has moved sharply, falling from approximately ¥160.17 on 1 September to as low as ¥152.89, lifting the yen’s value by approximately 4.8%. The market increasingly views the latest yen appreciation as being driven not simply by broad-based dollar weakness, but by expectations of an additional BOJ rate hike.
Speculators’ short-yen positions had expanded to approximately 102,000 contracts as of 1 September. Further yen appreciation could trigger stop-losses and short-covering, potentially creating a cycle that drives the yen still higher.
There is growing speculation that the unwinding of yen carry trades will affect the cryptoasset market. Yen-denominated BTC prices are particularly susceptible to the impact of exchange-rate movements in addition to fluctuations in the dollar-denominated price. STH-SOPR is currently holding around 1, and no extreme loss realization of the kind seen in August 2024 has yet been observed.
The key factors to watch are the BOJ’s policy decision and USD/JPY movements. The focus will be on whether the carry-trade unwind spreads across the broader market as USD/JPY moves toward ¥150 or falls below ¥152.89.