Bitcoin is moving unusually closely with the dollar-yen exchange rate, and the latest data cuts against one of the market’s more familiar macro narratives. TradingView data shows the 52-week rolling correlation between Coinbase bitcoin prices in dollars and USD/JPY has fallen to -0.90, the most negative reading since late 2022. At that level, bitcoin has tended to decline when USD/JPY rises, which means the yen is weakening, and to stabilize or recover when the yen strengthens.
That is the opposite of what the carry trade argument would normally suggest. Under that framework, traders borrow cheaply in yen and move into higher-yielding, riskier assets. A weaker yen is often seen as supportive for those trades and, by extension, for speculative assets such as bitcoin. Yet the current data points the other way. The article notes that a relationship this strong implies 81% of weekly BTC price changes track moves in USD/JPY.
The 2024 yen rebound fed the carry-trade narrative
The carry trade explanation did not appear out of nowhere. For years, the yen has been a major funding currency in global markets because of Japan’s low-rate environment. By that logic, a stronger yen should tighten funding conditions and push investors away from risk. That would leave both equities and crypto under pressure.
Markets saw a version of that in July and August 2024. After the Bank of Japan raised interest rates, the yen surged and risk assets sold off. Bitcoin then fell from $65,000 to $50,000 in the following weeks. Episodes like that helped reinforce the idea that yen strength and crypto weakness should move together.
Dollar repricing may be the cleaner explanation
More recently, the yen has weakened again and touched multi-decade lows this week, reviving talk that the BOJ may need to act more aggressively to slow the slide. If traders follow the classic carry-trade script, any BOJ move that lifts the yen should be bearish for bitcoin. But the current correlation suggests the opposite outcome is possible: a rebound in the yen could coincide with a pause in BTC’s decline.
The bigger point is that correlation does not establish causation. The article argues that neither bitcoin nor the yen is necessarily driving the other in a direct way. A broader move in the U.S. dollar may be influencing both at the same time. Markets have recently priced in at least one 25-basis-point Fed rate increase this year, a sharp reversal from earlier rate-cut expectations. That repricing has lifted the dollar against currencies including the euro, Australian dollar and New Zealand dollar, while also weighing on gold and silver. In that setting, the tight inverse relationship between BTC and USD/JPY may reflect a shared dollar factor rather than a pure yen-led carry trade effect.