US and Japan Yen Intervention: Carry Trade Fears in Bitcoin, But This Time the Picture is Different

The joint intervention by the US and Japan in the yen market reminds Bitcoin investors of past carry trade crises, but current data suggests the situation might be different this time.

US Treasury Secretary Scott Bessent confirmed last Sunday that the US, along with Japan, engaged in a coordinated intervention in the foreign exchange market. Following this step taken against “disorderly yen movements,” the USD/JPY pair rapidly retreated from 164—its weakest level since 1986—to the 156.5 level. Stating that they strongly support Japan’s market and monetary policy steps, Bessent emphasized that they would not hesitate to conduct further interventions if necessary.

This development brought back memories of the major crash in the cryptocurrency market in August 2024. At that time, the Bank of Japan (BOJ) unexpectedly raised interest rates to 0.25 percent, leading to the unwinding of yen carry trade (borrowing in low-interest yen to invest in high-yield assets) transactions. During this process, the price of Bitcoin (BTC) dropped from the $62,000 level to the $49,000 range in just one week, losing approximately 20 percent of its value.

Is the Correlation Between Bitcoin and the Yen Changing?

Although the current picture triggers carry trade fears, analyses by CoinDesk show that dynamics might be different this time. Bitcoin’s 52-week moving correlation with the USD/JPY pair has reached -0.90. This technical data proves that Bitcoin actually fell along with the weakening yen, showing a movement contrary to traditional carry trade logic. Experts believe the pressure on the market stems from general US dollar strengthening rather than being yen-driven.

While 30-year bond yields in Japan approach the 4 percent mark, the price of Bitcoin continues to follow a sideways trend above $63,000. BOJ Governor Kazuo Ueda pointed out that AI demand and yen weakness are triggering inflation, yet the crypto market has not yet shown that sharp reaction from the past. While investors closely monitor the impact of macroeconomic interventions on Bitcoin, it remains a matter of curiosity whether the current negative correlation will protect the market from a possible shock.