Japan's 30-year bond yields have hit a historic high of 4.223%, raising concerns about the impact of the yen carry trade on Bitcoin and broader risk asset markets.
The global FX market is seeing its lowest volatility in nearly 20 years, driving traders toward carry-trade strategies that have returned 18% year-to-date.
Morgan Stanley forecasts the USD/JPY rate will hit 163 by late July 2026, advising clients to rebuild carry trades as the yen's recent rally is deemed temporary.
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.
Bitcoin faces potential price drops due to rising Japanese bond yields and a strengthening yen, with carry trade unwinds potentially involving $500 billion.
