Bitcoin (BTC) traded at a slight premium in the Japanese market on Monday, as the depreciating yen (JPY) suddenly switched gears and surged against the dollar, bearing all the hallmarks of central bank intervention. It was showing.
According to TradingView chart data, the Bitcoin and Japanese Yen (BTC/JPY) pair on bitFlyer, a major Japanese cryptocurrency exchange, is about 0.2% of the dollar-denominated price of Bitcoin on Nasdaq-listed Coinbase (COIN). is trading at a premium. CoinDesk reached out to bitFlyer for comment and was awaiting a response at press time.
The top cryptocurrency by market capitalization has consistently commanded a premium on a Japanese yen basis in recent weeks. Earlier this month, the premium rose to 1.49%, the highest since March 2020, a sign that traders are diversifying into alternative assets to hedge against yen volatility.
“Currently, the premium for Bitcoin in the Japanese market is hovering around 0.3% to 0.4%, down from over 1% in mid-April and down from the year-to-date high of 1.7% recorded in mid-March. However, this is subject to change. Overall, divergence in monetary policy expectations and geopolitical stress are increasing currency volatility, which could impact cryptocurrencies. Desislava Aubert, a Paris-based silkworm analyst, told CoinDesk.
The yen fluctuated wildly in Japan's thin holiday trading on Monday, initially falling by 160% in pips per dollar to a 34-year low, but by early European market prices it had fallen by 500 pips to the dollar. It only rebounded to 155 pips. time.
The speed and scale of the recovery has fueled debate over whether the Bank of Japan should intervene to put a floor on the yen or sell the dollar. Local media neither confirmed nor denied the rumored BOJ action, instead claiming that low liquidity and wariness about possible central bank action at around 160 pips led to the sudden appreciation of the yen.
The yen has lost support from investors as a surge in public debt has made it impossible for the Bank of Japan to match U.S. interest rates.In other words, Japan's fiscal crisis playing In the FX market.
The Federal Reserve is scheduled to hold a policy meeting this week that could emphasize the need to keep interest rates at 5.25% for an extended period of time amid low inflation.
The Bank of Japan last week kept the policy rate unchanged at 0-0.1%, after raising it above zero earlier this year. The central bank maintained ultra-easy monetary policy through the 2022-2023 Fed tightening cycle, encouraging traders to sell the yen.
