The Japanese yen swung wildly on Monday, recovering 500 pips from over three-decade lows on suspected BOJ intervention.
By Omkar Godbole Apr 29, 2024 at 11:31 a.m. UTC BTC drew a slight premium in Japanese markets on Monday as the yen swung wildly in holiday-thinned trading.
Bitcoin (BTC) traded at a slight premium on Japanese markets on Monday as the sliding yen (JPY) suddenly switched gears and surged against the greenback, bearing all hallmarks of central bank intervention.
The leading cryptocurrency by market value has consistently drawn a premium in JPY terms in recent weeks.
The recovery’s speed and magnitude spurred talks of BOJ intervening or selling dollars to put a floor under the yen.
The yen has fallen out of investor favor as burgeoning public debt keeps the Bank of Japan (BOJ) from matching U.S. interest rates.
Last week, the BOJ kept the benchmark interest rate unchanged at 0-0.1%, having lifted it above zero early this year.
The central bank maintained an ultra-lose monetary policy through the 2022-23 Fed tightening cycle, motivating traders to sell the yen.
The Japanese yen saw wild swings on Monday, rising 500 points from lows reached more than three decades ago amid rumors of BOJ intervention.
By Godbole Omkar.
29 April 2024 at 11:31 a.m. M. UTC.
In Monday’s holiday-shortened trading, the yen saw sharp fluctuations, which gave Bitcoin a small premium.
According to one watcher, FX volatility is increasing and could have an effect on the cryptocurrency market.
As the sliding yen (JPY) abruptly changed course and surged against the US dollar, exhibiting all the signs of central bank intervention, Bitcoin (BTC) traded at a slight premium on Japanese markets on Monday.
As per TradingView charting, the bitcoin-JPY pair on bitFlyer, a prominent cryptocurrency exchange in Japan, traded at a premium of approximately 0.2 percent compared to the price of bitcoin denominated in dollars on Coinbase, a company listed on the Nasdaq. At the time of publication, CoinDesk had contacted bitFlyer for feedback and was awaiting a response.
In recent weeks, the most valuable cryptocurrency according to market value has continuously gained value in Japanese yen. The premium increased to a high of 1.49% at the beginning of this month, the highest level since March 2020, indicating that traders were diversifying into non-yen assets to avoid the volatility of the yen.
In mid-April, the bitcoin premium on Japanese markets was over 1%, and in mid-March, it reached a yearly high of 1.7 percent. At present, it is averaging between 0.3 and 0.4 percent. That could, however, alter. Overall, FX volatility is rising as a result of geopolitical tension and increasingly divergent monetary policy expectations; this could have an effect on cryptocurrencies, according to CoinDesk analyst Dessislava Aubert of Paris-based Kaiko.
During a shortened Japanese trading session on Monday due to holidays, the yen fluctuated sharply, first falling to 160 percentage points (pips) per U.S. s. dollar hit a 34-year low, but in the early hours of Europe, it recovered 500 points to trade at 155 points per USD.
Talks of BOJ interfering or selling dollars to support the yen were sparked by the recovery’s rapid and substantial pace. The abrupt yen spike was caused by low liquidity and apprehension about possible central bank action around 160 pip levels, according to local media, which did not confirm nor deny the reported BOJ action.
As the public debt continues to rise and the Bank of Japan (BOJ) cannot match U.S. S. interest rates. Alternatively put, the FX market has been reflecting Japan’s fiscal crisis.
This week’s policy meeting of the Federal Reserve (Fed) may emphasize the necessity of maintaining interest rates at 5 percent for an extended period of time in light of sticky inflation.
After raising it above zero early in the year, the BOJ maintained the benchmark interest rate at 0-0.1 percent last week. For the duration of the Fed tightening cycle in 2022–2023, the central bank maintained an ultra-lose monetary policy, which encouraged traders to sell the yen.
Parikshit Mishra served as the editor.
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