Key facts
- The US and Japan jointly intervened to support the Japanese yen.
- The yen strengthened significantly against the dollar following the intervention.
- Bitcoin's price remained stable near $63,600, largely unaffected by the currency action.
- The carry trade, which involves borrowing in low-interest yen to invest elsewhere, is a key concern for crypto markets.
- Analysts suggest the intervention may only slow the yen's decline due to the persistent interest rate differential.
Bitcoin traded near $63,600, largely steady in the past 24 hours, as a rare joint intervention by the United States and Japan to support the yen revived concerns about the carry trade. The yen strengthened after Washington and Tokyo confirmed they bought the currency on Friday, with Bank of Japan data suggesting Tokyo may have spent as much as $36.6 billion. The yen rebounded to around 157.57 per dollar from a low of 163.73.
Crypto traders closely monitor the yen due to the carry trade, where investors borrow at Japan's low policy rate of 1% and invest in assets offering higher returns. A rapid appreciation of the yen can force these traders to unwind positions, potentially selling other assets to repay loans. However, this risk has not immediately impacted bitcoin.
Alvin Kan, chief operating officer at Bitget Wallet, suggested the intervention should be viewed as a check on disorderly trading rather than the start of a sustained yen recovery. He noted that the significant interest rate gap between the dollar, with the Federal Reserve's benchmark range at 3.50% to 3.75%, and the yen continues to favor dollar-denominated assets. Without a narrowing of this gap or voluntary unwinding of yen-funded trades, repeated intervention might only slow the yen's depreciation.