Yen Carry Trade Liquidation and the Crypto Market: An Analysis

Yen Carry Trade Liquidation and the Crypto Market: An Analysis

Jeffrey Ding, a senior analyst at HashKey Group, recently expressed his opinion on the impact of yen carry trade liquidation due to Japan's interest rate hike on cryptocurrencies. He believes that the impact will be limited and that the crypto market will, in fact, rise on increased dollar liquidity in the long run. Ding explained that with Japan's interest rate hike, global funds are selling assets to repay loans from Japanese banks. However, the assets they are trading are mainly U.S. bonds and stocks, not cryptocurrencies. Additionally, if the Federal Reserve makes a drastic rate cut, it could lead to a V-shaped recovery for cryptocurrencies. The issue of the Middle East war is also being somewhat reflected in the financial market. However, analysts are still waiting to see what action Iran will take. The indicators related to the U.S. economic recession still need to be observed. What is certain is that if the U.S. dollar continues to weaken in the long run, the prices of all risk assets will rise. Bitcoin is one of the most responsive assets among them. Overall, the analysis suggests that the impact of the yen carry trade liquidation on cryptocurrencies will be limited, and that the crypto market is expected to rise in the long run.