Japan spent nearly $100 billion in August trying to strengthen the yen. Even after that intervention, the currency failed to reach 154 against the dollar.

Then traders pushed it there themselves. USD/JPY fell from 160.39 on Wednesday to 154.50 by Monday, meaning the yen strengthened 3.7% in three sessions without another confirmed rescue from Tokyo. 

Now, why does this matter for the crypto market? Because a similar yen surge in August 2024 forced investors to unwind cheap yen-funded trades and dump risk assets, including Bitcoin.

Bitcoin Just Passed the Yen Test

The danger was always the speed of the move. BeInCrypto flagged the risk on September 1, when the yen was still near 159.75 per dollar.

In August 2024, a similar rush out of yen-funded trades forced investors to dump risk assets. Bitcoin and Ethereum fell as much as 20%.

This time, Bitcoin held above $79,000. That makes Monday’s move a useful stress test for a trade that hurt crypto badly last year. It also comes as Japan reveals how much the first intervention cost — and why another rescue may be harder to repeat.

This time, Bitcoin remains above $79,000, close to its highest level since May. That makes the current move an important break from the 2024 playbook.

Japan May Have Less Firepower Left

The Ministry of Finance also revealed where the first intervention money came from.

Japan’s foreign reserves fell $94.6 billion in August to $995 billion. Foreign securities alone dropped $87.8 billion, suggesting Tokyo sold short-dated US Treasuries to fund the defense.

That creates a political problem.

“Japan still has room to intervene given the amount of securities it holds, but given comments from Bessent, selling US Treasuries to fund further intervention could end up attracting pressure from the US,” Japan Research Institute economist Akira Nishimura said.

That leaves the Bank of Japan carrying more of the burden.

Markets now price around 75 basis points of cumulative rate hikes by April 2027, according to HSBC. A quarter-point increase next week would take rates to 1.25%, extending the tightening path BeInCrypto highlighted after July’s inflation data.

BOJ board member Hajime Takata has already pushed for faster action, urging policymakers to move “nimbly” against rising inflation.

The remaining question is how fast the yen keeps rising. Bitcoin has survived the first shock. A more violent move would be the real test.

Source: BeInCrypto