Could a Japanese Yen Carry Trade Unwind Trigger a Crypto Market Meltdown? 🤔

by

In the glitzy world of Bitcoin and altcoins, investors are on high alert, keeping a keen eye on Japan’s market. With core consumer inflation skyrocketing to 3.2% in January, the Bank of Japan might be coaxed into announcing rate hikes sooner than anticipated. Déjà vu, anyone? This situation eerily resembles the August 2024 rollercoaster that sent crypto markets tumbling!

Bitcoin’s Future: To Infinity and Beyond…

Bitcoin’s price has been on a wild ride, increasing by 1.3% in the past 24 hours and currently sitting pretty at $98,388.43. Boasting a market cap of $1.95 trillion, BTC has been teasing the $90,000-$100,000 range without a clear victory for either side. Crypto oracle Rekt Capital has zeroed in on a crucial level Bitcoin must conquer to preserve its bullish market structure: a weekly close above roughly $97,000.

The demand for Bitcoin has taken a nosedive in the past two months, leaving traders feeling a bit meh. CryptoQuant’s research guru, Julio Moreno, weighed in: “Bitcoin’s failure to rally to new highs is because demand has cooled down significantly since December.”

Altcoins: Ready for a Comeback?

After a wild 2024, altcoins experienced a massive pullback in early 2025. But fear not! Market experts are optimistic about a rally just around the corner. Crypto analyst Patrick H pointed out a renewed interest in altcoins, hinting at a potential resurgence. According to Patrick, altcoins are showing signs of life as the horizontal channel pattern he introduced last week is playing out nicely.

Japanese Yen Carry Trade Unwind: The Unseen Beast?

Whispers of the Japanese Yen Carry Trade unwinding have been haunting the streets as Japan’s inflation accelerates beyond expectations. If the Bank of Japan raises interest rates, it could lead to a mass exodus from the carry trade. Taro Saito, the head of economic research at NLI Research Institute, said, “Japan’s core inflation is likely to remain around 3% in the first half of this year. The BOJ will keep mulling the timing of its next rate hike, rather than worrying about whether they need it.”

As the Japanese Yen gains strength, the USD/JPY pair is plunging to new lows, dipping below 150 levels. Analyst James Stanley cautions about potential bear traps as the USD/JPY breaks the critical 150.00 level. If evidence emerges that the U.S. dollar has peaked, it could fuel the fire for carry trades to unwind.

Read More

2025-02-21 10:10