U.S.-Japan Forex Intervention Sparks Yen Carry Trade Concerns for Bitcoin

Markets The recent coordinated foreign exchange intervention by the U.S. and Japan has raised concerns about the yen carry trade's impact on Bitcoin.

The yen's sharp rise could indicate U.S. dollar strength as the greater risk for Bitcoin.

By James Van Straten|Edited by Stephen Alpher Aug 3, 2026, 2:46 p.m. 1 min read

• The USD/JPY exchange rate dropped from nearly 164 to 156.5 following the intervention, reminiscent of Bitcoin's August 2024 downturn.
• Despite worries that a stronger yen might negatively affect cryptocurrencies, Bitcoin's 52-week correlation with USD/JPY reached -0.90, suggesting that U.S. dollar strength could be the primary concern.

U.S. Treasury Secretary Scott Bessent announced on Sunday that the U.S. took part in a coordinated intervention with Japan to stabilize what he called "disorderly yen movements." The USD/JPY pair had nearly hit its weakest point since 1986 at 164 before recovering to 156.5 on Monday.

"We are prepared to engage in further joint interventions," Bessent stated on X, affirming U.S. support for Japan's measures to address the yen's significant undervaluation.

August 2024 was marked by a significant downturn in the crypto market due to the unwinding of the yen carry trade. The Bank of Japan (BOJ) unexpectedly raised interest rates to 0.25%, which caused the yen to strengthen, leading to Bitcoin's price plummeting from around $62,000 to $49,000 within a week, a drop of approximately 20% as investors sold off risk assets to cover losses denominated in yen.

Last week, the BOJ maintained its rates at 1%, while Governor Kazuo Ueda pointed to AI demand and yen weakness as contributing factors to inflation exceeding 2%.

Is This Situation Different?

While many anticipate Bitcoin to decline with a stronger yen, analysis from CoinDesk reveals a contrary trend. Bitcoin's 52-week correlation with USD/JPY has reached -0.90, indicating that Bitcoin's decline has been associated with a weakening yen, contradicting traditional carry-trade expectations. This suggests that the broader strength of the U.S. dollar is the more significant factor at play.

Regardless of the intervention, Japanese bond yields continue to rise, with the 30-year yield nearing 4%, while Bitcoin remains relatively stable above $63,000.

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