Bitcoin carry trade yen dynamics are back in focus. BTC has staged a notable recovery in recent sessions, climbing above the $63,000 level amid July’s seasonality and US Fed-driven liquidity.
Consequently, Bitcoin could rally amid rising carry trades as the Japanese yen falls to multi-decade lows against the US dollar. Goldman Sachs predicts further yen weakness.
Why Bitcoin carry trade yen matters now
Goldman Sachs revised its yen forecasts, expecting the USD/JPY pair to reach 165 within a year. The Wall Street bank sees further yen weakening primarily due to Japan’s interest rate differential with the US.
The bank earlier estimated a 155 yen target. Nevertheless, it raised its three-month outlook to 162 and six-month to 163. The Japanese yen was at 162.15 per dollar in early Asian trading on Monday, up nearly 0.3% from the previous session.
The change reflects fiscal pressures in Japan, higher‑for‑longer US Treasury yields, and only gradual rate hikes from the Bank of Japan, strategist Karen Reichgott Fishman wrote.
US Fed Chair Kevin Warsh sees limited urgency for rate hikes, fueling hopes of a rate cut. Meanwhile, the yen dropped to a 40‑year low of 162.63 against the US dollar after the Bank of Japan hiked rates from 0.75% to 1.0%, a 31‑year high.
Japan’s 10‑year government bond yield hovered around 2.8% on Monday, staying close to its highest level in 30 years. This happened amid mounting concerns over rising fiscal spending and heavier government borrowing.
Bitcoin could rally amid further yen carry trades
Goldman also predicted that yen weakness could further cause carry trades to rise. Specifically, the strategy involves borrowing yen to invest in higher‑yielding risk assets such as Bitcoin. Weakening yen boosts profitability by reducing repayment costs in local terms, encouraging leveraged positions.
Broader crypto sentiment remains mixed, with Bitcoin trading around $63,000. The price rebounded above the 200‑week moving average (WMA) amid a crypto market recovery. Therefore, investors are watching USD/JPY closely, as further yen weakening could sustain the rally. However, any reversal could raise volatility.
CoinGlass data showed mixed sentiment in the derivatives market. At the time of writing, the total Bitcoin futures open interest lost nearly 0.29% to $46.44 billion in the last 24 hours. Nevertheless, the 4‑hour BTC futures OI on CME and Binance plunged 0.76% and 0.94%, respectively.
Meanwhile, Japan’s National Business Corporate Pension Fund is set to invest in Bitcoin and other cryptocurrencies in fiscal 2026. This comes as Japanese regulators advance crypto‑friendly policies, including reducing crypto tax gains to 20%.
