Bitcoin is trading in the high $70,000s as a stronger yen, surging Japanese bond yields and rising oil prices squeeze risk assets at once. Traders are also weighing a possible Federal Reserve rate hike after Friday's jobs report, adding another layer of pressure on the world's largest cryptocurrency.
Yen strength revives carry trade unwind fears
The yen strengthened beyond 154 to reach 152.99 against the dollar, its strongest level since February, according to CoinDesk. Bitcoin has dropped more than 1% over the past 24 hours, hovering just above $78,000, while gold has fallen 1% to $4,390 an ounce.
This revives concern about an unwind of the yen carry trade, which Crypto Briefing estimates could total as large as $500 billion. When the yen strengthens, borrowers who took out yen loans owe more in dollar terms, and rising Japanese yields squeeze both sides of the trade at once.
Bond yields and oil add to the squeeze
Japan's 10-year government bond yield has climbed to 3% for the first time since 1996, and the 30-year JGB yield is approaching record levels near 4.18-4.205%. The Bank of Japan's policy rate now sits at 1%, its highest since 1995, after a rate hike in June 2026, with the BOJ's next meeting set for September 17-18.
Meanwhile the U.S. 10-year Treasury yield is firmly above 4.8%, and government bond yields in the U.K., France and Germany have also risen. Oil is climbing too: WTI crude futures are trading at $94.44, the highest since June 8. Prices have risen 9.5% this month, reviving inflation fears. Traders are now pricing in a 60% chance the Fed raises rates at its Sept. 16 meeting.
What a deeper drawdown could look like
During past episodes of sharp yen appreciation, Bitcoin has experienced price drawdowns of up to 20%, according to historical data cited by Crypto Briefing; the August 2024 yen carry trade scare saw Bitcoin drop sharply before recovering once the unwind pressure eased. A 20% drawdown from current levels would put Bitcoin near $62,000, roughly back to where it traded in late 2024.
spot Bitcoin ETFs have added a structural buyer base that didn't exist during earlier episodes. Whether that base can absorb the selling pressure from a $500 billion carry trade unwind remains an open question.
Sources: CoinDesk, Crypto Briefing
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