Japan’s Bond-vs-Yen Dilemma Could Shake Bitcoin and Crypto: Analyst

A rapid unwind of yen-funded trades could trigger forced selling across markets, including cryptocurrencies. Bitcoin’s reaction to the Bank of Japan’s latest policy decision may look calm on the surface, but one analyst believes a much bigger liquidity risk is building beneath global markets. His warning came after the BOJ left its benchmark interest rate unchanged at 1% on July 31. Japan’s Bond Market Dilemma Could Spill into Crypto According to EGRAG CRYPTO, Japan’s financial system has run for more than three decades on the assumption that money would stay almost free. That assumption formed after the Nikkei peaked near the end of 1989, and policymakers spent the following decades pushing rates toward zero to avoid a repeat collapse. The approach let Japan pile up one of the largest public debt loads of any developed economy, and the Bank of Japan became the biggest single buyer of its own bonds. The analyst wrote that “Japan is approaching one of the most dangerous monetary crossroads in modern financial history,” pointing to wage growth that has pushed past 5%, a level not seen since before the country’s deflationary stretch started. That change weakens the old case for near-z...