Yen Weakness Raises Bitcoin Sell-Off Risk

Japan’s yen is weakening again despite nearly $97 billion in government support, raising the prospect of further intervention and creating another potential risk for Bitcoin and broader crypto markets.

The yen fell to 160.16 against the US dollar on Friday, August 28, surrendering more than half of the gains made since authorities intervened last month. Continued currency weakness increases the cost of imported goods and adds pressure on Japanese households and businesses.

Japan spent ¥15.4 trillion supporting the yen between July 30 and August 26. The effort included unusual coordinated intervention with the United States on July 31, when both countries purchased yen in an attempt to strengthen the currency.

However, the impact has faded as US interest rates remain above Japanese rates, encouraging investors to favor dollar-denominated assets. The dollar received additional support after Federal Reserve Chair Kevin Warsh reiterated his commitment to bringing inflation back toward the Fed’s target.

Bitcoin also came under pressure following Warsh’s remarks, briefly falling below $77,000 as markets priced in the possibility of tighter US monetary policy.

Japan could create another challenge for Bitcoin through the yen carry trade. Investors have historically borrowed yen at relatively low interest rates and invested the proceeds in higher-yielding assets overseas. If Japanese authorities intervene aggressively or the Bank of Japan raises rates, a rapidly strengthening yen could force investors to unwind these positions.

Such an unwind may trigger selling across global risk assets, including Bitcoin and other cryptocurrencies, as traders raise cash to repay yen-denominated borrowing.

A similar episode occurred in August 2024, when the reversal of yen-funded carry trades contributed to sharp market volatility. Bitcoin and Ethereum recorded losses of as much as 20% during the sell-off.

Despite the near-term risks, Metaplanet CEO Simon Gerovich remains optimistic about Bitcoin’s longer-term prospects. Speaking in Hong Kong this week, Gerovich argued that Asian investors are increasingly willing to move beyond traditional cash savings and embrace Bitcoin.

“The buyers arriving now aren’t going anywhere,” Gerovich said, adding that he believes Bitcoin has already reached its bottom and could enjoy a stronger remainder of the year.

Metaplanet itself holds Bitcoin, giving the company direct exposure to rising crypto adoption. While longer-term Asian demand could support Bitcoin, renewed yen intervention and carry-trade unwinding remain important risks for crypto investors.