Bitcoin Struggles Below $80,000 as Yen Carry Trade Unwind Threatens Risk Assets

Bitcoin (BTC) struggled below $80,000 on Wednesday as attention refocused on the Japanese yen.

Key points:

Bitcoin saw further macro headwinds as US-Iran strikes pushed Brent crude oil above $100 per barrel.

The Japanese yen continued to trade around 153 per dollar, its highest levels since February as yen shorts stayed near record highs.

US Treasury Secretary Scott Bessent hinted at further interventions in yen currency markets to come.

Bitcoin lacks momentum as Iran strikes sour risk-asset mood

Data from TradingView showed the local upside in the BTC/USD pair reversing as it attempted to revisit the $80,000 mark. BTC is currently down by around 0.4% on the day.

US stocks also drifted lower at the Wall Street open, fueled by fresh US strikes on Iranian oil tankers. The tensions helped send oil prices to new three-month highs, building on gains from the day prior.

At the time of writing, WTI crude traded above $96 per barrel, while Brent crude surged above $101 per barrel for the first time since late July.

Traders also eyed fresh developments in the yen as Japan’s currency hit its highest levels against the dollar since February. It is currently at $0.0065, up 6.5% since the start of August.

Previously, Cointelegraph reported on repeated joint interventions in foreign exchange markets by Japan and the US, which resulted in the rapid strengthening. The yen’s gains continued despite speculation that Washington may keep Japan from selling US Treasuries as part of future interventions.

Yen short interest lingers near record highs

Citing data from Bloomberg on Wednesday, Barchart flagged record yen short positioning at the start of September, with the total hovering above 5 trillion yen.

In subsequent commentary, Charu Chanana, chief investment strategist at Saxo, told Reuters that the yen’s continued strength would have implications for these shorts as part of an unwinding of the yen carry trade. The USD/JPY pair is key for liquidity conditions that could ultimately impact crypto markets.

“The carry trade is vulnerable because this unwind is happening before the BOJ has even delivered its expected hike,” she said.

“Some yen shorts have already been cut, but positioning still looks sizeable, so further yen strength can turn a gradual reduction in leverage into a much faster, self-reinforcing unwind.”

The risk was exacerbated by the Bank of Japan’s anticipated 0.25% interest-rate hike at its next meeting on Sept. 28.

Last month, US Treasury Secretary Scott Bessent suggested that the door was open to future yen intervention operations. This week, he doubled down on those hints, appearing to dare short traders to bet against central banks.