- Bitcoin and Nasdaq have to struggle in view of the Yen strength, with Bitcoin falling another 5% after a 17% decline in February this month.
- The Yen-Rallye, driven by rising Japanese bonds, could decrease, which could reduce the pressure on the Bitcoin and Nasdaq markets.
Bitcoin and Nasdaq are falling sharply because the Japanese yen becomes stronger besides rising government bonds. Bitcoin, which is currently being traded at $ 81,400, fell by 5% this month and thus continued the decline of February. On February 28, the course fell briefly to $ 79,000.
In the meantime, the Nasdaq also has to struggle, which reflects the general concerns of investors. The timing of this decline of market coincides with a significant strengthening of the Japanese yen, which leads to speculation about a possible correlation. The recovery of the yen was driven by a strong increase in the returns of Japanese government bonds (JGB), which have reached a level that has not been achieved for over 16 years.
The increase in returns is due to the widespread expectation of further interest rate increases by the Bank of Japan (Boj) and a global sale of the bond markets. The 10-year-old JGB return has now exceeded the 1.5 % mark, while the 30-year return has increased to over 2.5 %, which indicates inflation pressure and a change in Japanese monetary policy.
Will Bitcoin and Nasdaq find relief?
Although the yen had a strong run, some believe that his upward dynamics could have reached its peak. Data Commodity Futures Trading Commission (CFTC) show that speculative positions in the Yen reached a record high last week. Such an overstretched market state often leads to a reversal that Bitcoin and Nasdaq could make relief.
Morgan Stanley’s G10 FX Strategy Team also warned that the strength of the yen could not last long. The company said:
“We are now careful about the hunt for another JPY strength, since the speculative positioning is extended and the appetite of the local population is great for dip purchases.”
A key factor that restricts the upgrading of the yen is the Nippon Individual Savings Account (NISA) program, which encourages Japanese investors to buy foreign assets in low-risk times. In addition, Japan’s public pension system tends to separate from Yen systems, which further prevents the currency from increasing.
Historical patterns could signal a trend reversal
A look at past trends shows that in August 2023 there was a similar market dynamics. The yen experienced a strong upgrade, which led to a significant sale in stocks. However, this recovery of the Yen finally weakened and triggered renewed willingness to take risks from which Bitcoin and Nasdaq benefited.
The USD/JPY currency pair serves as a key indicator. It recovered from his July August low of 140 and finally climbed to 158.50 until January 2024. The Bitcoin followed a similar development and recovered from his crash in early August to $ 50,000 before reaching new all -time highs over $ 108,000 in January.
At the moment USD/JPY is traded at 147 and is therefore slightly above the five -month low of 145.50, which was recorded early Tuesday. The narrowing of the span of return between US and Japanese bonds, which is now 2.69%, also supports an interest bullish outlook for the yen.
