Yen’s Surge Spurs Market Moves as XRP Outshines Crypto Majors
The Japanese yen breached the critical 150 level against the U.S. dollar early Friday, a development often associated with the unwinding of carry trades. Meanwhile, XRP stood out in the crypto market, rising over 5% in the past 24 hours, leading gains among major cryptocurrencies during a Thanksgiving holiday that saw Bitcoin (BTC) avoid its historically feared “massacre.”
Market Performance
Bitcoin climbed steadily to trade above $96,000 early Friday, recovering from Thursday’s lows of $93,500. Other major cryptocurrencies, such as Ether (ETH), Solana’s SOL, and Binance’s BNB, remained relatively stable. Cardano’s ADA posted a 3.5% gain, while dogecoin (DOGE) slipped 1.2%.
The CoinDesk 20 Index (CD20), which tracks liquid major tokens, rose by 1.3%. Mid-cap tokens like Algorand’s ALGO and Worldcoin’s WLD surged as much as 21%, although there were no immediate catalysts driving these gains.
Yen Breaks Key Level
The yen’s brief rise above the 150 mark against the dollar was fueled by expectations of a December rate hike by the Bank of Japan (BOJ). This speculation followed higher-than-anticipated Tokyo inflation data. Month-end financial adjustments and low liquidity during the Thanksgiving holiday likely exacerbated the yen’s movement.
Market sentiment now indicates a 63% chance of a BOJ rate increase, contrasting sharply with a 67% likelihood of a Federal Reserve rate cut. A BOJ rate hike could make yen-denominated loans more expensive, leading to the unwinding of carry trades—investments funded by borrowing yen at low rates to finance higher-yield assets.
Impact on Crypto Markets
The yen’s strength historically acts as a signal for risk-off sentiment, affecting assets like Bitcoin inversely. Yen outperformance at the end of July and September previously led to a pullback in risk-on bets financed by cheap yen loans, echoing current market conditions.
Earlier this week, a CoinDesk analysis highlighted weakening momentum in Bitcoin’s bullish run, partly influenced by the Australian dollar/yen (AUD/JPY) exchange rate, which has been dropping. The AUD, a proxy for global economic sentiment, often moves inversely to the yen, and this relationship impacts risk assets like Bitcoin.
In a previous instance, rumors of a BOJ rate hike drove an 8% drop in AUD/JPY and caused Bitcoin to tumble by $20,000, underscoring how foreign exchange dynamics can ripple through crypto markets.
Outlook
With the yen reclaiming its safe-haven status and influencing global risk sentiment, cryptocurrencies may continue to feel the effects of these macroeconomic shifts. XRP’s outperformance and Bitcoin’s resilience suggest a mixed landscape for digital assets, navigating between bullish optimism and cautious macro-driven adjustments.
