The crypto market is currently going through a downturn.
The question is not just 'why is it dropping?' but especially:
đ is this just a simple correction or a trap before a broader bullish move?
Since the beginning of the year, Bitcoin has experienced drops and some rebounds, moving within a range.
But why isn't BTC taking off despite the long-term fundamentals?
The role of the yen and the carry trade
Do you know about the Japanese carry trade?
For over 30 years, interest rates in Japan were close to 0%, even negative.
This allowed investors to borrow in yen at a very low cost to invest in risky assets such as:
U.S. stocks
cryptocurrencies
This is called the carry trade.
The problem arises when the yen strengthens or Japanese rates rise.
In this case, these strategies become less profitable, even risky, and investors are forced to withdraw from risky assets.
The Japan â United States factor
Recently, Japan raised its rates to support an economy under pressure.
It should be noted that:
Japan is the 4th largest economy in the world
he is one of the main creditors of the United States
he holds about 1 100 billion dollars in U.S. bonds
To stabilize its situation, Japan may need to sell some of these bonds.
Direct consequence:
rise in rates in the United States
pressure on the dollar
flight to risk-off assets like gold and silver
In this context, Bitcoin could seek lower zones, around $75,000, especially with the current geopolitical tensions.
The role of the FED and leverage effect
Another key variable is the potential intervention of the FED.
This could involve selling dollars to support the yen.
According to Tim Sun, the short-term price of Bitcoin is heavily influenced by leveraged capital.
When investors have to buy back yen to close their loans, they sell primarily:
cryptos
stocks
This creates additional selling pressure.
Concerns about a coordinated intervention involving the creation of dollars to support the yen partly explain the recent sell-off in crypto and stock markets, as the yen has strengthened.
Risk of forced unwinding
A forced unwinding of leveraged positions could:
further destabilize the bond market
reduce global liquidity
This recalls the episode of the carry trade in August 2024, which sent Bitcoin below $50,000 and caused more than $1 billion in liquidations.
However, a major difference should be noted: đ the overall appetite for risk among leveraged players is currently lower than in 2024, which limits the potential shock magnitude.
The scenario of a BTC below $75,000 remains credible in the short term, as long as macro tensions and liquidity dynamics persist.
The future will mainly depend on the decisions of central banks and the appetite for risk.
#StrategyBTCPurchase #FedWatch
