The Japanese yen fell on Friday to its lowest level against the US dollar since 1990. Bitcoin remained at around $64,000 as some altcoins fell lower. Intervention could Social media soon if yen devaluation continues, said Quinn Thompson of Lekker Capital.
Cryptocurrencies, widely known for their often volatile nature, were a sea of calm on Friday as the Japanese yen's fall to a new 34-year low against the US dollar left traditional market watchers wondering about potential side effects.
Bitcoin (BTC) continued its recent volatile intraday move in a tight range around $64,000, down 0.9% over the past 24 hours. The broad market CoinDesk 20 Index (CD20) fell further as tokens from the smart contract network Solana (SOL), ICP, and decentralized exchange Uniswap UNI fell 2% to 4%.
The Japanese yen (JPY) fell another 1.3% on the day — a huge move for the major currency — to its lowest level against the US dollar since 1990 after the Bank of Japan (BOJ) kept interest rates at NEAR zero and T steel indicate greater concern about currency weakening. Meanwhile in the US, continued strong economic growth and persistently high inflation are dampening hopes of any monetary easing this year.
“Currency movements of this size and speed are not normal, so I would expect some intervention or coordination fairly soon if they continue over the next few weeks,” Quinn Thompson, founder of hedge fund Lekker Capital, told CoinDesk.
The yen devaluation has weighed on Crypto markets so far, but that could change if the Bank of Japan steps in to support the currency, Noelle Acheson, an analyst and author of Crypto Is Macro Now reports, said in an email interview.. Possible intervention would mean the Bank of Japan would sell dollar assets (US Treasuries) to buy the yen, and a weaker dollar could theoretically help cryptocurrency rates, she added.
According to Lekker's Thompson, another form of intervention could come from US policymakers deciding to inject liquidity into the Markets that could support risk assets such as cryptocurrencies.
Read more: The key to reviving Bitcoin's bull run is the US Treasury's refund announcement. Zooming out, Acheson predicted that «T currency turmoil will end with the yen» as the recent jump in US yields following disappointing inflation reports will put stress on other currencies, perhaps forcing other central banks to take action.
“We could see a collective selling of U.S. Treasuries to raise cash to support local currencies, which would increase pressure on U.S. yields while increasing inflation pressures elsewhere,” Acheson said.. “This volatility and currency vulnerability could encourage an increase in corporate and even government hedging assets such as gold and Bitcoin.”