Japan's yen weakened again despite roughly $97 billion spent defending it over the past month, falling to 160.16 yen per dollar on Friday, 28 August. The slide revives pressure on Tokyo to intervene again, and traders are watching whether a resulting yen rebound could unwind carry trades that have helped prop up Bitcoin.
Japan's yen rescue fades
The yen gave up more than half its gains since last month's intervention, sliding back to 160.16 per dollar. A weaker yen makes imports costlier for Japanese households and businesses.
Japan spent ¥15.4 trillion supporting its currency between 30 July and 26 August, a campaign that included rare joint action with the US on 31 July, when both countries bought yen to lift its value. Yet the currency has kept sliding since.
US interest rates remain higher than Japan's, keeping dollar investments more attractive. The dollar found further support this week after Federal Reserve chair Kevin Warsh pledged to bring inflation to target.
How a stronger yen could hurt Bitcoin
Bitcoin briefly fell below $77,000 after Warsh's speech as investors priced in higher US rates. Japan's currency moves could add to that pressure.
Some investors borrow yen cheaply and use the funds to buy assets elsewhere, a strategy known as the carry trade. If fresh intervention or higher Japanese interest rates push the yen sharply upward, those loans become more expensive to repay in other currencies, and investors may sell assets to cover their debts, potentially dragging Bitcoin lower.
This has happened before: in August 2024, the reversal of yen-funded trades amplified selling, and Bitcoin and Ethereum suffered losses of up to 20%.
Metaplanet chief executive Simon Gerovich sees longer-term opportunity. Speaking in Hong Kong this week, he argued that Asian savers were ready to move beyond cash and embrace Bitcoin. According to BeInCrypto: "I believe the bottom is in." His company buys and holds Bitcoin, giving him a financial stake in that outlook. Such demand could grow over time. Bitcoin remains vulnerable to sudden market sell-offs.
Source: BeInCrypto
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