Bitcoin fails to reclaim $80,000 as yen strength stokes carry unwind

Bitcoin traded about 0.4 percent lower just below $80,000 on Wednesday as a stronger yen revived carry-trade unwind fears threatening leveraged risk assets.

The unwind risk is acute because it is arriving before the Bank of Japan has delivered its expected rate increase. "The carry trade is vulnerable because this unwind is happening before the BOJ has even delivered its expected hike," Charu Chanana, chief investment strategist at Saxo, told Reuters. "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 yen climbed to its strongest level against the dollar since February, with USD/JPY trading near 153.6 on Wednesday, down from above 155 in recent weeks and from nearly 164 before the joint US-Japan intervention. Yen short positioning hovered above 5 trillion yen at the start of September, near record levels, according to Bloomberg data flagged by Barchart. Treasury Secretary Scott Bessent has doubled down on his yen-support campaign, telling a Southern Methodist University event on Tuesday that he holds "asymmetric information" on Bank of Japan policy. "I am the house now," he said, according to the Financial Times. Japan spent $96.4 billion between July 30 and Aug. 26 defending the currency.

The stakes for crypto are direct. A yen carry-trade unwind mirrors the August 2024 episode, when yen appreciation forced leveraged investors to liquidate risk assets globally, including Bitcoin and US equities. With the BOJ expected to raise rates 0.25 percentage point at its Sept. 28 meeting, further yen strength could accelerate that deleveraging and keep Bitcoin pinned below the $80,000 resistance level.

Oil tops $101 as Iran strikes sour risk appetite

US stocks drifted lower at the Wall Street open as fresh US strikes on Iranian oil tankers pushed crude to three-month highs. WTI traded above $96 a barrel while Brent topped $101 for the first time since late July, adding a geopolitical premium that compounded selling pressure on Bitcoin and equities alike. The escalation handed risk assets a second headwind on top of the currency-driven unwind.

Hedge funds bet yen falls below 150

Hedge funds are wagering USD/JPY drops below 150 by year-end, with some options trades targeting a move as low as 140, according to Bloomberg. For Bitcoin, the $80,000 mark now stands as immediate resistance, and the August 2024 precedent shows how quickly yen strength can turn a gradual reduction in leverage into a self-reinforcing unwind across crypto and equities. The BOJ decision on Sept. 28 is the next trigger for whether that scenario plays out.

This article is for informational purposes only and does not constitute investment advice.