According to Odaily Planet Daily, the yen has risen 2.4% against the dollar since last Thursday to 145 yen per dollar, showing a preference for safe-haven currencies. Similar yen strength triggered the unwinding of carry trades in early August, leading to sharp fluctuations in risk assets including Bitcoin.
The price of Bitcoin fell from about $70,000 to $50,000 in the eight days before August 5, and then rebounded to $60,000 as the dollar rebounded against the yen. Well-known trader Simon Ree and Goldman Sachs crypto trading head Andrei Kazantsev pointed out that the strength of the yen could lead to a negative feedback loop for global risk assets.
According to ING's analysis, the yen's rebound could change market behavior, increasing the willingness to buy when the yen weakens, thereby increasing the risk of a stronger yen. In the coming weeks, as the Federal Reserve's mid-September interest rate decision meeting approaches, the unwinding of carry trades may continue.
Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions, said markets could rally before falling if the Fed cuts rates by 50 basis points as concerns about the economy and yen strength reignite the unwinding of carry trades.