The Japanese yen has gained ground against the U.S. dollar and Bitcoin, following comments from U.S. Treasury Secretary Scott Bessent suggesting an impending interest rate hike by the Bank of Japan (BOJ). Bessent, speaking on Bloomberg TV, asserted that Japan is trailing behind in addressing inflation—a situation he believes necessitates a rate increase. This perspective diverges sharply from BOJ Governor Kazuo Ueda’s cautious stance, which emphasizes the need to bolster domestic demand and wages before making any swift monetary policy adjustments.
Yen’s Surge Raises Eyebrows
The yen’s recent ascent has been particularly notable on cryptocurrency platforms like BitFlyer, where the BTC/JPY pairing tumbled by 1.7% to 17,845,432 yen. This marks a more significant drop compared to the BTC/USD pair on Coinbase, which decreased to $121,650. Meanwhile, the dollar-yen pair slumped to a three-week low of 146.21, reinforcing the yen’s newfound strength.
The market’s response to Bessent’s comments—suggesting that the BOJ might finally tackle inflation more aggressively—has been swift. Historically, the yen has served as a funding currency, benefiting from Japan’s persistently low interest rates. Traders would often borrow in yen to invest in higher-yielding assets elsewhere, a strategy known as the carry trade. However, this dynamic appears to be shifting.
Changing Forex Dynamics
Marc Chandler, chief market strategist at Bannockburn Global Forex, believes that the yen’s role as a carry currency might be diminishing. “Risk-off is frequently the result of unwinding of funding trades, e.g., short yen, long Brazilian real (BRL). However, the yen may not be the most attractive funding currency at present,” Chandler noted in an email to CoinDesk. He pointed to the zero policy rate of the Swiss franc and higher volatility in the yen as factors that could redirect investment flows. This shift in the yen’s status comes as companies like Bakkt expand their presence in Japan, as seen in Bakkt’s acquisition of a 30% stake in Japan’s Marusho Hotta.
This shift in the yen’s status comes against a backdrop of growing calls for the BOJ to rethink its monetary policy. The Trump administration has, for some time, advocated for more stringent policy measures to stabilize the yen and correct trade imbalances between the United States and Japan. A U.S. Treasury report in June urged the BOJ to prioritize yen normalization as part of a broader strategy to rebalance bilateral trade.
Implications for Crypto and Beyond
The strengthening yen has broader implications for the cryptocurrency market, which thrives in environments of risk-taking and liquidity. A robust yen could signal a risk-off sentiment among investors, potentially dampening enthusiasm for volatile assets like Bitcoin. With the dollar-yen pair continuing to weaken, traders are left pondering the BOJ’s next move and its implications for global financial markets. This comes at a time when Bakkt is rebranding Marusho Hotta to bitcoin.jp, signaling a strategic shift in the crypto landscape in Japan.
Looking forward, it remains unclear whether Ueda will yield to external pressures and hike rates or continue to prioritize domestic economic conditions. What is certain, however, is that the yen’s journey is far from over. As the financial world watches closely, the interplay between Japanese monetary policy and global market dynamics could set the tone for currency and crypto trends throughout the rest of 2025.
In this climate of uncertainty, questions linger about the sustainability of the yen’s rally and its potential impact on global markets. Will the BOJ take a bold step in the coming months? Only time will tell, as the yen continues its unpredictable dance with both fiat and digital currencies.
Source
This article is based on: Yen Rises Against Bitcoin, Dollar as Scott Bessent Predicts Bank of Japan Rate Hike
Further Reading
Deepen your understanding with these related articles:
- Japan’s crypto tax overhaul: What investors should know in 2025
- Dollar weakness boosts Bitcoin hopes, but macro risks could delay $120K
- Historic Stock Market Crash Patterns Are Back – Will Bitcoin React? | US Crypto News
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
