Key facts
- Bitcoin fell over 2% following a joint US-Japan intervention to buy Japanese yen.
- This marks the first such coordinated foreign exchange action by the US and Japan since 1998.
- US Treasury Secretary Scott Bessent pledged further intervention to support the yen.
- The intervention caused the USD/JPY pair to drop significantly and the US dollar index (DXY) to fall.
- Fears of a carry trade unwind, which has previously supported Bitcoin, emerged following the intervention.
Bitcoin experienced a notable decline, falling more than 2%, as the United States and Japan executed a joint intervention to purchase Japanese yen. This rare move, the first of its kind since 1998, was aimed at stabilizing the yen. US Treasury Secretary Scott Bessent's commitment to further coordinated intervention heightened investor concerns about the potential unwinding of carry trades, which have previously supported Bitcoin's price.
The intervention saw Japanese authorities, supported by the Federal Reserve Bank of New York acting on behalf of the US Treasury, sell euros to acquire yen. This action pushed the USDJPY pair down to approximately 156.50 and caused the US dollar index (DXY) to fall to 99.50. Bessent emphasized that these actions countered disorderly yen movements and affirmed strong US support for Japan's efforts.
Despite the Bank of Japan's earlier interest rate hikes, the yen had struggled to strengthen against the dollar. The joint intervention, however, proved effective in reversing this trend. Data from the CFTC indicated an increase in net short positions for the Japanese yen among leveraged funds in the preceding week. Analysis shows Bitcoin's 52-week rolling correlation with USD/JPY had hit -0.90, suggesting BTC was actually falling alongside a weakening yen, which is the opposite of carry-trade logic, and that broad U.S. dollar strength was the likely driver.
Japanese bond yields are still surging regardless of the announcement, with the 30-year yield approaching 4%, while bitcoin has remained relatively flat above $63,000.