Bitcoin Drops Nearly $64K, Analyst Says, 'Maybe Signaling 'Currency Turmoil' With Japanese Yen's Drop'

Bitcoin Drops Nearly $64K, Analyst Says, 'Maybe Signaling 'Currency Turmoil' With Japanese Yen's Drop'

As U.S. rate cuts remain elusive despite sticky inflation, the yen's tumultuous episode may extend to other fiat currencies, pushing investors toward gold and bitcoin, according to Noelle Acheson in an interview.

On Friday, the Japanese yen dropped to its lowest level since 1990 in relation to the US dollar.

While several cryptocurrencies declined, Bitcoin stayed steady at $64,000.

Quinn Thompson of Lekker Capital said that if the yen depreciation continues, intervention may come shortly.

Cryptocurrencies, which are well-known for being very volatile, were a sea of calm on Friday as conventional market analysts speculated about possible ripple effects from the Japanese yen's decline to a record 34-year low vs the US dollar.

The price of Bitcoin (BTC), which has dropped 0.9% in the previous day, maintained its usual erratic behavior throughout the day inside a narrow range around $64,000. The decentralized exchange Uniswap's UNI plummeted 2%–4%, while the smart contract network tokens solana (SOL), ICP, and CD20 fell somewhat more in the overall market.

The Bank of Japan (BOJ) kept interest rates close to zero and showed no worry about the falling currency, which caused the Japanese yen (JPY) to plummet another 1.3% throughout the day—a significant move for a major currency—to its lowest level vs the US dollar since 1990. In the meanwhile, expectations that monetary policy would be eased this year in the United States are being dashed by persistently high inflation and strong economic growth.

According to Quinn Thompson, the founder of Lekker Capital, a hedge firm, "moves of this size and speed in currencies is not normal so I expect a little assistance or coordination fairly soon if it extends into the next few weeks," CoinDesk said.

Noelle Acheson, an analyst and the author of the Crypto Is Macro Now reports, said in an email interview that although the depreciation of the yen hasn't yet affected the cryptocurrency markets, this might change if the BOJ intervenes to support the currency. She said that a potential intervention would include the BOJ selling US dollar assets (US Treasuries) in order to purchase yen, and that theoretically, a declining US dollar may support cryptocurrency values.

According to Thompson of Lekker, another kind of intervention may come from American officials choosing to provide liquidity to the markets, which might bolster riskier assets like cryptocurrencies.

 Declaration Looking further ahead, Acheson predicted that the "currency turmoil won't stop with the yen," as other currencies would be strained and maybe forced to intervene by other central banks as a result of the recent spike in U.S. rates that followed sticky inflation figures.

"We could see a collective selling of U.S. treasuries to raise cash to help local currencies, adding further upside pressure to U.S. yields while adding to rising interest rates elsewhere," Acheson said. "More corporations and even governments may decide to hold hedging instruments like bitcoin and gold as a result of this currency volatility and vulnerability."