- Bitcoin fell more than 1% to below $60,000, remaining under its 200-week moving average as currency markets swung with the yen’s slide.
- Strategy, the largest public holder of bitcoin, plans to sell more than $1 billion of BTC as part of a $1.25 billion monetization program, a sharp break from Michael Saylor’s long-held “never sell” stance.
- The Japanese yen has dropped to its weakest level against the dollar since 1986 amid starkly divergent U.S.-Japan interest rates, raising risks of a disorderly unwinding of yen-funded carry trades that could hit stocks, bonds and crypto.
Bitcoin BTC$59,512.49 is down over 1% on Tuesday as the Japanese yen slipped to four-decade lows against the U.S. dollar, triggering volatility in currency markets.
The leading cryptocurrency by market value traded below $60,000, holding below the pivotal 200-week simple moving average.
On Monday, Strategy, the world's largest publicly listed BTC holder, authorized plans to buy back as much as $1 billion each of its preferred and Class A common shares, and is launching a $1.25 billion "monetization program" to raise capital with bitcoin sales. Essentially, it may sell BTC worth over a billion dollars in an already weak market — a sharp pivot from founder Michael Saylor’s longtime mantra of “never sell your bitcoin.”
This pivot, however, may offer little long-term solace, according to some observers. Strategy’s preferred stock STRC, a yield-generating play, has cratered in recent weeks, weakening the company’s major funding channel for BTC purchases.
"The can has been kicked down the road for a year or two," Jeff Dorman, CIO of Arca, said on X.
"Cap structure trades will pop up again in the future, because again, there's no real answer here that satisfies all parts of the cap structure other than BTC mooning. Plus, Saylor will likely create more unforced errors (like paying down the debt which kicked all of this off in the first place — retired $1.5 bn in debt at the expense of $40 bn in enterprise value destruction)," he added.
Yen slide continues
Speaking of the Japanese yen, it slipped to a four-decade low of 162.40 per U.S. dollar, the lowest since October 1986 when Republican Ronald Reagan was the U.S. President.
The decline has lifted the U.S. dollar higher across the board. The Dollar Index, which tracks the greenback's value against major fiat currencies, has bounced to 101.32 from nearly 101 on Monday.
The yen's weakness is not new but has grown more acute. The currency, long used to fund "carry trades" (borrowing cheaply in yen to invest in higher-yielding risk assets worldwide), has declined roughly 57% against the dollar since 2021. This stems from divergent monetary policies: the U.S. Federal Reserve hiked rates above 5% at one point, while Japanese rates stayed near zero. The BOJ only recently lifted its policy rate to around 1%, still well below the U.S. rate of approximately 3.5%.
Market observers see the yen's slide as a symptom of Japan's fiscal challenges playing out in currency markets. With a debt-to-GDP ratio exceeding 220%, rapid rate hikes by the BOJ risk sparking a fiscal crisis. Yet continued inaction allows the yen to weaken further.
For now, Japanese officials are relying on jawboning, or verbal warnings to stem yen's slide, while the BOJ's hawkish stance remains largely on paper. Some analysts warn that eventual forceful BOJ action could trigger a mass unwinding of yen-funded carry trades, pressuring stocks, bonds, and crypto.
