- The weakening yen could give Bitcoin a boost amid liquidity injections and currency devaluations.
- Despite bearish signals, Bitcoin rose to $62,000, facing $64,000 resistance.
A month ago, Arthur Hayes, founder of the BitMEX exchange, expressed optimism about the weakening Japanese Yen (JPY), seeing it as a potential catalyst to inject liquidity and boost Bitcoin. [BTC] and the broader crypto market.
The Yen falls to a historic low against the USD
Fast forward: On June 26, the JPY hit its lowest point against the US dollar, its lowest point in almost 38 years. This led to speculation about possible interventions by authorities in the currency markets.
Many attribute this to the Federal Reserve’s decision to maintain high interest rates, which has led to the JPY being one of the worst performing currencies in the world.
Noting this and echoing Hayes’ views: The Bitcoin Therapist said,
“Is Japan going to print Yen to secretly buy #bitcoin? If so, it would be the smartest move in Japan’s history. Otherwise they will very quickly become a third world country.”
The yen weakened to 160.82 against the dollar, surpassing the previous record high of 160.03 set on April 29 and marking the weakest level since 1986, according to data from FactSet.
If we further supplement this dataset, Jeroen BloklandFounder and manager of the Blokland Smart Multi-Asset Fund commented:
“Over the past 12.5 years, the Japanese Yen has lost a whopping 53% of its value against the US dollar!”
Source: Jeroen Blokland/X
This caused many ripple effects within the financial community, as highlighted by ZeroHedge, who commented with a touch of sarcasm, stating:
Source: zerohedge/X
A good sign for Bitcoin?
But despite this, Hayes sees that a weakening yen could lead to competitive currency action between major economies, such as Japan and China, potentially leading to currency devaluations and greater liquidity injections (money printing).
This implies that Bitcoin, which is seen as a hedge against fiat currency devaluation, could benefit from these macroeconomic conditions.
Hayes anticipates that Bitcoin is said to perform well in such a scenario, it is highlighted as a resilient asset amid the global fiat currency instability.
That’s why Hayes put it best when he said:
“Crypto is booming because there is more dollar and yuan liquidity floating in the system.”
Meanwhile, as the Yen faced bearish pressure, BTC rose 0.56% to reach a trading price of $62,130.05.
However, the Relative Strength Index (RSI), significantly below the neutral level, indicated strong bearish sentiment. But IIf Bitcoin manages to surpass the $64,817 resistance level, it could signal a potential shift to a bullish phase.
Source: TradingView