Bitcoin Price Drop – Bitcoin Tumbles 15% in Yen Terms Amid Japan’s Rate Hike

Bitcoin Price Drop – bitFlyer Bitcoin Price Falls 15% Due to Yen’s Sharp Appreciation

Bitcoin Price Drop – Bitcoin’s yen-denominated price on the Tokyo-based bitFlyer exchange plummeted nearly 15%, significantly outpacing the 11% drop seen in its dollar-denominated price on Western exchanges. This sharp decline was primarily influenced by the yen’s significant appreciation following Japan’s 0.25% interest rate hike.

Impact of Yen Appreciation

The yen’s strong performance, having risen almost 10% against the USD over the past three weeks, has led to the unwinding of carry trades. This contributed to the sell-off in risk assets, including bitcoin. Trading volume on bitFlyer surged 241% within 24 hours, surpassing the $220 million mark, according to Coingecko.

Broader Market Impact

The steeper drop in bitcoin’s yen terms is attributed to the Japanese currency’s sharp appreciation in the foreign exchange markets. The Bank of Japan’s interest rate hike last week boosted the yen’s appeal, leading to a corresponding drop across risky assets, including bitcoin. The market rout deepened after Tokyo opened on Monday, with markets across Asia ending the day at a loss. Japan’s Topix 100 index experienced its worst session since 2011, while the Nikkei 225 was down 12.4%.

Crypto Futures and Market Sentiment

Meanwhile, crypto futures traders faced their worst day since March, with liquidations on crypto-tracked futures exceeding the $1 billion mark in the past 24 hours. The yen’s nearly 10% surge against the USD in three weeks is notable for the world’s third-biggest reserve currency, which is widely used by traders to fund purchases of risk assets.

Carry Trade Unwinding

The Bank of Japan’s rate hike has triggered the unwinding of carry trades. Carry trading involves borrowing an asset or currency at a low interest rate, such as the yen, and investing in an asset that provides a higher rate of return. Augustine Fan, head of insights at SOFA.org, commented on this development, stating, “The unwind of the carry trade is more a symptom of popular macro trades being taken off, as we have seen multi-sigma moves across asset classes, and hedge funds are forced to unwind positions for PNL protection.”

Market Outlook

Fan further noted that Japan has been a significant source of PNL income from USDJPY longs and Nikkei longs, suggesting a very muted risk sentiment and risk appetite going forward. Despite the bearish outlook, some analysts remain optimistic about a potential market bottom in the coming days.

Future Projections

Lucy Hu, senior analyst at Metalpha, explained that the recent pullback resulted from Japan’s economic policy tightening and the central bank’s unexpected hawkish stance. She added, “The bearish macro data in the U.S. sent investors worrying about a possible recession. However, despite no formal confirmation of a rate cut by the Fed in September, the market has priced in the event and we should expect a rebound in BTC price when the macro environment improves.”

FAQ: Bitcoin’s Price Drop on bitFlyer Exchange

For more up-to-date crypto news, you can follow Crypto Data Space.