Yen Surges Against Bitcoin & Dollar: Scott Bessent Foresees Bank of Japan Rate Hike Shockwave

Japan's currency flexes muscle as crypto and greenback stumble.

The hawkish domino effect

When Scott Bessent speaks, markets listen. The ex-Soros lieutenant just dropped a bombshell prediction that's sending shockwaves through forex and crypto markets alike.

Yield hunters pivot

Traders are scrambling to reposition as the last negative-rate holdout finally joins the global tightening party. Bitcoin's 'inflation hedge' narrative takes another hit while dollar bulls get squeezed.

The cynical take

Nothing like a decade-late policy move to convince everyone you're in control. Bank of Japan's 'surprise' shift proves even monetary dinosaurs can learn new tricks—when their currency's in freefall.

Risk-off ahead?

Traders have historically used the yen as a carry currency to fund purchases of assets in high-yielding economies. That is, they've exploited Japan's low interest rate to borrow yen and buy assets that give a higher return, profiting from the difference. As such, rallies in the yen often trigger fears of risk aversion in financial markets.

That may not be the case anymore, according to Marc Chandler, chief market strategist at Bannockburn Global Forex.

Risk-off is frequently the result of unwinding of funding trades, e.g. short yen, long Brazilian real (BRL). However, the yen may not be the most attractive funding currency at present.

"Not only is Swiss policy rate at zero, but JPY volatility is higher," Chandler told CoinDesk in an email.