Bitcoin’s rally loses momentum in yen terms as Japan’s currency rebound weighs on crypto returns
Bitcoin and other major cryptocurrencies remain broadly higher, but Japanese investors are seeing smaller gains as a strengthening yen reduces the performance of crypto assets when measured in local currency.
Although BTC, XRP, and other leading tokens have been gaining against the U.S. dollar, their yen-based trading pairs have not kept pace because of the yen’s rapid appreciation.
The Japanese currency strengthened to 161.55 per dollar from 162.42 earlier in the session, limiting gains across yen-denominated crypto markets. Bitcoin’s BTC/JPY pair on Tokyo-based BitFlyer rose 0.68%, while the BTC/USD pair traded on Nasdaq increased 1.15%. Similar differences were seen in XRP/JPY, ETH/JPY, SOL/JPY, and other yen pairs, which posted gains but remained behind their dollar-based counterparts.
The yen’s advance comes as markets increasingly anticipate possible intervention by the Bank of Japan or other policymakers after the currency dropped to a 40-year low earlier this week. Japan has historically supported the yen by selling U.S. dollars and buying its own currency, though those measures have typically delivered only temporary results. Traders have often resumed yen selling afterward due to Japan’s fiscal challenges and the continued interest-rate gap between Japan and the United States.
The outlook for further BOJ rate hikes strengthened after Japan’s June producer price index showed a 7.1% year-over-year increase, the strongest annual rise since March 2023. The higher inflation reading boosted expectations for tighter monetary policy, with a former BOJ official warning that interest rates could rise more quickly and potentially exceed 2%.
However, the current divergence between BTC/USD and BTC/JPY does not necessarily signal weakness for bitcoin. The yen and bitcoin have developed an unusual relationship, often moving in the same direction against the dollar. If this trend continues, future yen strength could eventually support bitcoin’s broader performance, even if yen-based crypto pairs continue to lag temporarily.
Japan’s pension fund strategy under scrutiny
Attention is also turning to Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, which oversees around ¥277 trillion ($1.87 trillion) in assets.
Japanese officials are exploring ways to encourage GPIF and other retirement funds to increase investments in domestic assets, a potential shift that could influence global markets.
InvestingLive analysts noted that GPIF held around ¥293.4 trillion, or approximately $1.81 trillion, in assets at the end of December, with allocations spread across domestic equities, international equities, Japanese bonds, and foreign bonds.
Because of its enormous scale, even small changes in GPIF’s investment strategy could have significant effects on global currency markets, bond yields, and equity flows.
Japan’s Finance Minister Satsuki Katayama said the government is looking into measures that could encourage GPIF to increase exposure to Japanese financial assets. The discussion comes as Japanese government bond yields remain near their highest levels in roughly three decades.
