Original | Odaily Planet Daily (@OdailyChina)

Author | Ethan (@ethanzhang_web3)

Black Monday strikes again.

OKX market data shows that on January 26th, BTC dropped from $88945 to $86090, with a maximum decline of 3.21%; ETH also fell from $2942 to $2786, with a maximum decline of 5.3%; SOL dropped from $126.99 to $117.16, with a maximum decline of 7.74%. As of the evening of the 26th, the market slightly rebounded, with BTC temporarily at $88200, ETH at $2915, and SOL at $123.

Unlike the gloomy atmosphere surrounding the crypto market, gold and silver prices have recently reached historical highs. COMEX data shows that the international silver price peaked at $109.560 per ounce within 24 hours, with a daily increase of 8.03%; international gold also rose, reaching $5059.7 per ounce, with a daily increase of 1.65%. Additionally, the yen performed strongly in the foreign exchange market. Data shows that the USD/JPY exchange rate hit 154, marking a new low since November last year, with a daily decrease of 1.11%.

On social media, a phrase 'Anything But Crypto' also reveals the hardships of cryptocurrency investors.

Trigger 1: Fluctuations in the yen exchange rate market

Today, the yen exchange rate experienced a wave of violent fluctuations in the foreign exchange market, with the yen rising sharply from 158.4 to 1 dollar to 153.9 to 1 dollar, an increase of more than 4 yen. Behind this change, the market widely speculates that Japan and the United States may have already begun joint intervention in the exchange rate, or at least are conducting 'exchange rate inquiries' as a prelude to foreign exchange intervention.

The violent fluctuations in the yen's exchange rate did not come out of nowhere. As early as January 23, the yen's exchange rate against the dollar in the Tokyo foreign exchange market saw a significant rise in a short period.

The Federal Reserve's rare 'exchange rate inquiry' is viewed as a preparatory stage for foreign exchange intervention, indicating the U.S. government's heightened attention to the depreciation of the yen. According to Xinhua News Agency, foreign exchange inquiries usually occur in the early stages of exchange rate intervention, where financial monetary authorities ask banks about current exchange rates and market conditions through the central bank, representing a more direct market operation signal than verbal intervention.

In fact, since 1996, the U.S. has only intervened in the foreign exchange market on three different occasions, the last of which occurred after the 2011 Japan earthquake, when it sold yen in conjunction with G7 countries to stabilize the market. Because of this, the market views the recent violent fluctuations in the yen's exchange rate as a signal that Japan and the U.S. may jointly intervene, and such joint action is likely an emergency response to the yen's sharp decline. For the cryptocurrency market, this means that market liquidity and risk sentiment may be significantly affected, especially during times of increased global macroeconomic uncertainty.

Why does the appreciation of the yen exacerbate the decline of Bitcoin?

For a long time, the yen's low-interest rate policy has led global investors to rush into arbitrage trades by borrowing yen and exchanging for high-yield assets. This so-called 'yen arbitrage trade' has always been an important part of global market liquidity. Arbitrage traders borrow low-interest yen and convert it into dollars and other high-yield assets, investing in Bitcoin, stocks, and other risk assets. However, when the yen's exchange rate rises sharply, arbitrage traders usually face pressure from rising funding costs, forcing them to close their positions and sell Bitcoin to repay their debts.

For example, in August 2024, the yen surged due to the unexpected interest rate hike by the Bank of Japan and expectations of exchange rate intervention, triggering the collapse of arbitrage trading, causing Bitcoin to plummet from $65,000 to $50,000 in just a few days.

Now, with the yen exchange rate rising sharply again, similar arbitrage trades in the market may be forced to close again, further exacerbating the volatility of Bitcoin prices.

In addition, those familiar with global financial markets know that the yen is not just Japan's currency; it is also seen as a barometer of global economic risk. Whenever global market uncertainty increases, funds often flow into the yen, regarded as a 'safe-haven currency.' This phenomenon is particularly pronounced during periods of global economic crises and financial turmoil. However, the fluctuations in the yen's exchange rate reflect not only the health of the Japanese economy but also changes in global risk sentiment.

This is also why the frequent fluctuations in the yen exchange rate, especially when facing global macroeconomic uncertainties, directly affect the prices of risk assets like Bitcoin. When the yen exchange rate continues to fluctuate and intensifies, the global market's risk aversion sentiment heats up, and risk assets (including Bitcoin) often experience a pullback, while safe-haven assets like gold and silver may see an increase. Especially in the context of potential joint foreign exchange intervention by the U.S. and Japan, a price pullback for Bitcoin in the short term has become a necessary market reaction.

It is worth noting that the negative correlation between Bitcoin and the U.S. dollar index (DXY) is particularly significant. When the dollar strengthens, investors tend to shift their funds to dollar assets, thereby reducing demand for high-risk assets like Bitcoin, which faces downward pressure; conversely, when the dollar weakens, Bitcoin may see an opportunity for an increase. If this U.S.-Japan intervention is successful, leading to a significant drop in the dollar-yen exchange rate, the dollar index will be suppressed, providing upward support for Bitcoin, which is primarily priced in dollars.

However, dialectically speaking, although exchange rate intervention may temporarily push up Bitcoin's price, if the intervention does not change the market's fundamentals, the price increase is often difficult to sustain. Previous exchange rate intervention events indicate that government intervention is only temporary, and changes in market trends depend more on the fundamentals of the global economy.

Trigger 2: Increased probability of another U.S. government shutdown, cryptocurrency market structure bill may stall again

With another law enforcement shooting incident occurring in Minnesota, the risk of a U.S. government shutdown has surged. According to the latest data from Polymarket, the market predicts the probability of a government shutdown has skyrocketed to 82%.

This situation was triggered by a fatal shooting incident in Minneapolis on January 24. 37-year-old emergency room nurse Alex Pretti lost his life during a standoff with federal law enforcement. After the incident, the federal government and local law enforcement agencies had conflicting accounts of what happened. The shooting itself sparked widespread public outrage and quickly became a catalyst for political gamesmanship.

Democratic leader Chuck Schumer stated clearly that if the Department of Homeland Security (DHS) does not resolve disputes regarding law enforcement, the Democrats will do everything possible to block the advancement of the appropriations bill. Since the Senate requires 60 votes to pass a bill, this political deadlock will directly affect the government's operation. It is worth noting that after the government experienced a 43-day shutdown last time, it fell back into a 'deadlock' just two months later.

This political deadlock not only means that the U.S. government faces the threat of a shutdown but also directly impacts the regulatory process of the cryptocurrency industry. The review meeting for the cryptocurrency market structure bill originally scheduled for January had to be postponed due to controversy; however, the intensification of this political game has caused the bill, which should have continued to advance, to fall back into a deadlock.

Although the 'market structure' part of the cryptocurrency market seems to have reached a considerable consensus, controversies surrounding stablecoin yields, DeFi compliance, and the SEC's regulatory tools in the tokenized securities field have posed significant political obstacles to advancing the bill.

As Alex Thorn, research director at Galaxy Digital, pointed out, this delay highlights the deep divisions between Congress and the cryptocurrency industry on several key issues, particularly regarding stablecoin yield mechanisms and DeFi-related provisions. Alex Thorn further mentioned that within just 48 hours, over 100 amendments were submitted, and stakeholders continued to uncover new points of contention at the last minute, significantly increasing the difficulty of political coordination. For the cryptocurrency market, the uncertainty of policy has exacerbated market volatility, and the government's shutdown means that regulatory policies cannot be expected in the short term, leaving investors filled with uncertainty and concern about the future. (Recommended reading: (CLARITY review unexpectedly postponed, why are industry divisions so serious?))

Conclusion

In this macro game, gold has regained its dominant position in the market with a 'retro' stance. When international gold prices first broke through $5,000, the flow of safe-haven funds became evident. However, Bitcoin, which was once highly anticipated as 'digital gold,' has delivered a dismal performance in this systemic shock - since October 2023, long-term holders (LTH) have massively cut losses and exited. This is not just a collapse in price but also a collapse in trust for Bitcoin in the face of a true financial crisis. At this time, the market chose not innovation but stable safe-haven assets, and the surge in gold confirmed this.

All of this reveals a cruel reality: in the shadow of a financial crisis, the market tends to prioritize 'stability' over 'narrative.' Gold, as a safe-haven asset, solidified its position as a refuge during the sovereign credit crisis, while Bitcoin's sluggishness exposed its still fragile credit foundation within the mainstream financial system. The million-dollar bet on Polymarket about 'Gold or ETH reaching $5,000 first' has been resolved, with gold's victory marking not only a decisive price breakthrough but also a symbolic 'aesthetic return' for the market.

Although traditional assets have regained dominance, emerging assets are still groping for true trust in the market amidst the fog. However, market fluctuations are not without opportunities. The cryptocurrency market, which has broken the 'four-year cycle' rule, still harbors bottom-fishing opportunities.

As Placeholder VC partner Chris Burniske noted, from the buyer's perspective, the price ranges worth paying attention to for BTC include: about $80,000 (November 2025 low, the low point of this phase); about $74,000 (April 2025 low, formed during tariff panic); about $70,000 (close to the bull market peak in 2021); about $58,000 (near the 200-week moving average); and $50,000 and below (the lower edge of the weekly range, which has strong psychological significance; if broken, it could trigger discussions about 'Bitcoin is dead').