JAKARTA - Bitcoin prices are again under pressure after the Japanese yen fell to its weakest level in nearly four decades against the US dollar. The weakening of the yen triggered turmoil in the currency market and strengthened the US dollar, which also weighed on Bitcoin's movement.
Citing a report by CoinDesk, quoted Tuesday, June 30, Bitcoin fell more than 1 percent on Tuesday's trading in Asia to trade below $60,000. The largest cryptocurrency by market capitalization is also still moving below the 200-week simple moving average (SMA), one of the technical indicators that many investors use to read long-term trends.
Pressure on Bitcoin prices also comes from Strategy, the world's largest publicly traded Bitcoin holder.
On Monday, Strategy approved a plan to repurchase preferred shares and Class A common shares of up to 1 billion US dollars. The company also launched a monetization program worth 1.25 billion US dollars to raise capital through the sale of Bitcoin.
The move drew market attention because it was considered contrary to the old attitude of Strategy founder Michael Saylor, who has always been known for the slogan "never sell Bitcoin".
However, according to Arca's Chief Investment Officer, Jeff Dorman, this change in strategy is not necessarily a solution to the company's funding problems in the long term.
"The problem is only delayed one or two years," Dorman wrote on X.
He assessed that the issue of the Strategy's funding structure could potentially re-emerge. According to Dorman, there is no truly satisfactory solution other than if the price of Bitcoin rises sharply. He also argues that Michael Saylor still has the potential to make decisions that could reduce the value of the company.
At the same time, pressure from the foreign exchange market is also increasing.
According to CoinDesk, the Japanese yen weakened to 162.40 per US dollar, the lowest level since October 1986. The weakening encouraged the strengthening of the US dollar against major currencies. The Dollar Index, which measures the strength of the dollar against a number of major world currencies, rose to 101.32.
The weakening of the yen is triggered by differences in monetary policy between Japan and the United States. Since 2021, the value of the yen has fallen by about 57 percent against the US dollar.
When the Federal Reserve raised interest rates above 5 percent, the Bank of Japan or BOJ kept interest rates close to zero. The BOJ has recently raised its benchmark interest rate to around 1 percent, still well below the United States' interest rate.
For years, the yen has also been the main currency in carry trade practices, a strategy of borrowing funds in low-interest currencies to invest in assets that offer higher returns.
Analysts assess that the weakening of the yen reflects Japan's fiscal challenges. With the government debt ratio reaching more than 220 percent of gross domestic product, aggressive interest rate hikes risk burdening fiscal conditions. On the other hand, if the BOJ remains cautious, the value of the yen has the potential to continue to weaken.
For the time being, the Japanese government is still relying on verbal warnings or jawboning, which is an effort to influence the market through official statements without taking direct policy measures, to mitigate the weakening of the yen.
A number of analysts predict that if the BOJ eventually takes a more aggressive step, a massive dismantling of carry trade transactions could occur and potentially put pressure on the stock, bond, and crypto asset markets.
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