Hedge funds are betting on a stronger Japanese yen, raising concerns about the potential unwinding of carry trades that could impact Bitcoin and other risk assets.
The Bank of Japan is rapidly shrinking its balance sheet, reducing JGB purchases to their lowest level since 2013 as it unwinds a decade of bond buying.
Bitcoin faces potential price drops due to rising Japanese bond yields and a strengthening yen, with carry trade unwinds potentially involving $500 billion.
Japan's five-year government bond auction on June 22 showed a decline in demand as investors worry about yen weakness and potential rate hikes.
Japanese real wages rose 2.4% in July, the highest increase since 2021, paving the way for potential Bank of Japan interest rate hikes.
An adviser to Japanese PM Sanae Takaichi predicts the Bank of Japan will raise interest rates to 1.25% in September.
Bitcoin reached $81,000 as the US dollar weakened following suspected currency intervention by the Bank of Japan.
