This may be a coincidence, but the recent denial of Nasdaq and Bitcoin (BTC) is coinciding with a sharp increase Japanese government bond yields and the strengthening of the safe haven Japanese Yen (JPY), which is reminiscent of the dynamic markets seen in early August.
There may be a cause here, such as, for decades, low harvest promotes global property prices. The ever -increasing Japanese yen can have a hand in recent rising risk on Wall Street and the crypto market.
That is Macromicro. Such a severe bullish positioning, which represents a collective belief in a continuous transfer of higher in possession, sets the stage for failure, compliance, in which a mass unaccompanied longs opens, leading to a rapid return.
In other words, the rise of the yen can be stable for now, offering relief at risk ownership, including Nasdaq and Bitcoin.
“We are now cautious in chasing JPY’s additional strength, given stretched imaginations as well as strong purchase of appetite from the domestic community,” Morgan Stanley’s G10 FX Strategy Team said in a note to clients on Friday.
Strategists have explained that many Japanese investors use the Nippon individual account (NISA) method to snap foreign properties during the danger-off, inadvertently slowing down the speed of JPY’s appreciation. In addition, the public pension system tends to fight the trend, re -balance JPY ownership.
“In fact, the scenario occurred last August after a sharp JPY appreciation and the pronounced sale-off to equality,” strategic said.
Let’s see if history repeats itself, triggers a modified risk-on sentiment for Nasdaq and Bitcoin. The USD/JPY pair opens following July and early August slide to 140, eventually rising to 158.50 in January. The BTC also turned from the early August crash to $ 50,000, rising to new records high to $ 108,000 in January.
At the time of the press, Bitcoin exchanged close to $ 80,300, which represents a month-to-date decline of almost 5%, reaching a 17.6% slide of February. At one point early Tuesday, prices faded at $ 76,800, according to Coindesk data.
Meanwhile, USD/JPY exchanged in 147.23, which was placed in a five -month -old to 145.53 early Tuesday, TradingView data show.
Temporary respect?
While the stretching bull positioning and institutional flows suggest relief in advance, these factors can be done a little to change Bullish’s broader views for JPY, supported by a narrow US-Japanese bond variation.
Thus, risk assets of risk need to be vigilant for signs of volatility in the yen and a wider financial market.
The chart shows the spread between the produce of 10-year US and Japanese government bonds.
The spread was narrowed to 2.68% in a JPY way positive, reaching the lowest since August 2022. Plus, it dives out of a macro uptrend, suggesting a major bullish shift at JPY Outlook.
