Bitcoin has demonstrated a notably strong inverse correlation with the dollar-yen exchange rate over the past year.
By Omkar Godbole Jun 30, 2026, 7:14 a.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on BTC/USD shows an inverse relationship with USD/JPY. (Pascal Bernardon/Unsplash)SummaryShow- Bitcoin has exhibited a remarkably strong negative 52-week correlation with the USD/JPY exchange rate, where around 81% of its weekly fluctuations can be statistically attributed to changes in USD/JPY.
- This trend indicates that Bitcoin and the yen have recently moved in tandem against the dollar, contradicting the conventional carry-trade perspective that a stronger yen would negatively impact cryptocurrencies and other risk assets.
- The observed connection between Bitcoin and the yen may stem from broader dollar dynamics driven by changing Federal Reserve interest rate expectations, rather than a direct link between the two assets.
The price of Bitcoin, currently at BTC$59,501.13, has been closely tracking the USD/JPY exchange rate. This inverse correlation challenges the widely held "carry trade" theory that posits a stronger yen could lead to increased risk aversion in the cryptocurrency market.
According to TradingView, the 52-week rolling correlation coefficient for the BTC/USD pair on Coinbase and the USD/JPY pair now stands at -0.90, marking the most negative correlation since late 2022. This figure suggests that approximately 81% of the weekly changes in BTC/USD can be statistically explained by fluctuations in USD/JPY.
A correlation coefficient of -0.90 signifies a strong inverse relationship: when USD/JPY rises, BTC/USD tends to decline, and vice versa. As a rising USD/JPY reflects yen weakness, it indicates that Bitcoin and the yen have generally moved in unison against the dollar, either both strengthening or both weakening.
For comparison, correlations between Bitcoin and major forex pairs are usually weak and inconsistent, often ranging from -0.3 to +0.3 depending on the timeframe analyzed. A correlation of -0.90 over a rolling 52-week period is notably rare and merits further examination.
Implications for Carry Trade Theory
The prevailing narrative surrounding the carry trade has typically suggested that movements in the yen influence cryptocurrencies and other risk assets in the opposite manner. For over a decade, traders have borrowed yen at low interest rates to invest in higher-yielding assets elsewhere.
According to the carry trade framework, a weak yen (i.e., a rising USD/JPY) should be associated with increasing Bitcoin prices, akin to its effects on stocks. Thus, a strengthening yen is expected to induce risk aversion in both equities and cryptocurrencies.
This dynamic was evident in late July and early August 2024, when the Bank of Japan raised interest rates, leading to a significant appreciation of the yen. This event caused a sharp decline in risk assets, with Bitcoin dropping from around $65,000 to $50,000 in the subsequent weeks.
Concerns about unwinding carry trades have resurfaced as the yen continues to depreciate, recently hitting four-decade lows. This situation has sparked speculation about more assertive measures from the Bank of Japan to stabilize the yen.
Nonetheless, if the current correlation holds true, any potential action by the Bank of Japan that leads to a stronger yen could paradoxically support Bitcoin, contradicting traditional carry trade expectations.
Is This Correlation a Mirage?
It is crucial to note that correlation does not imply causation.
Neither Bitcoin nor the yen may be directly influencing each other. Instead, the overall strength or weakness of the US dollar could be impacting both assets independently, creating the illusion of a strong Bitcoin-yen relationship.
This interpretation aligns with recent market trends, as traders have factored in at least one 25-basis-point interest rate hike from the Federal Reserve this year. This shift towards a more hawkish stance, a significant turnaround from earlier expectations of rate cuts, has bolstered the dollar across the board. Other currencies and commodities, including the euro, Australian dollar, New Zealand dollar, gold, and silver, have all declined against the dollar during this period.
Market participants should consider this caveat before drawing definitive conclusions based solely on the correlation between BTC/USD and USD/JPY.
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