Several cryptocurrency market experts believe that the sharp decline in Japanese Yen carry trades could create favorable conditions for Bitcoin over the medium term.
The assessment highlights that although the Bank of Japan’s (BOJ) move toward normalizing monetary policy might exert short-term pressure on leveraged positions, it simultaneously offers markets a clearer outlook by diminishing uncertainties surrounding global financing environments.
Negentropic, co-founder of Glassnode, emphasized that market anxiety stems more from unpredictability than from rising interest rates. He explained that BOJ’s policy normalization enhances investor confidence through increased predictability. Despite temporary challenges, this shift is seen as a potential catalyst to boost risk appetite in the long run. The significant reduction in yen carry trades already underway is also regarded as a crucial element supporting this trend.
The report points out that heightened volatility often opens up investment opportunities. Historically, Bitcoin tends to gain strength following periods when policy pressures ease and remains cautious just before such easing occurs. With diminished uncertainty and clearer market signals now present, there appears to be growing potential for an “asymmetric upside risk” favoring Bitcoin.
Furthermore, Negentropic noted the importance of how BOJ communicates its stance on possible interest rate increases. Officials are expected to adopt a data-dependent strategy aimed at preventing further rises in new and bond yields. Since swap markets have largely factored in any prospective rate hikes already, future guidance and transparency from the bank will be pivotal factors influencing outcomes.
*This content does not constitute financial advice.*