Bitcoin fell more than 2% after US Treasury Secretary Scott Bessent pledged further coordinated yen intervention, stoking fears of a carry trade unwind. The move followed a rare joint US-Japan operation to buy yen for the first time since 1998. Bitcoin last traded near $62,322 as CFTC data showed rising short bets against the yen.
Bitcoin pared earlier gains and fell more than 2% in a few hours after investors grew wary of a yen carry trade unwind. The drop followed a rare joint intervention by the US and Japan to buy yen, and it came primarily after the US Treasury Secretary signaled further coordinated action.
US and Japan Intervene to Buy Yen
Japanese authorities and the US Treasury conducted joint yen buying last week, the first such effort in decades. Japan's Ministry of Finance intervened aggressively, with purchases of several trillion yen.
The Federal Reserve Bank of New York acted on the Treasury's behalf, selling euros to buy yen through major banks including Goldman Sachs and Morgan Stanley. Strategists say using euros rather than dollars avoids weakening the US currency.
According to Treasury Secretary Scott Bessent: "Friday's coordinated foreign exchange actions countered disorderly yen movements," he said, adding that the US will strongly support Japan's decisive market and monetary steps to stabilize the yen. However, his pledge of further yen intervention sparked investor caution over the unwind of carry trades that have supported Bitcoin. Bessent also urged Japan's Ministry of Finance and central bank to use the Fed's FIMA Repo Facility to support the yen.
President Donald Trump characterized the US intervention to support the yen as a sign of friendship, and said it is also good for the world economy.
Bitcoin Falls Below $62,500
The Bank of Japan had already raised interest rates to 1% in June and held them steady in July, but those moves failed to support the yen's strengthening against the dollar. The latest joint intervention, however, pushed the yen to strengthen significantly.
Meanwhile, the USDJPY pair dropped to around 156.50, with the US dollar index falling to 99.50, sparking carry trade unwind jitters among investors and institutions.
The latest CFTC data confirms that net short positions in the Japanese yen increased last week, while long positions dropped. Leveraged funds were already heavily short the yen and kept adding to those shorts just before the joint intervention.
Bitcoin plunged almost 2% in the last few hours to trade at $62,322, swinging between a 24-hour low of $62,275 and a high of $63,714. Trading volume rose 14% over the past 24 hours.
Source: CoinGape
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