Goldman Sachs Warning vs On-Chain Data: How Will the Scarcity Logic of 21 Million BTC Respond to the "Asian Black Swan"?

Original title: Yen Surge, Soaring Bond Yields Could Threaten Bitcoin as BOJ Weighs Policy Shift

Original author: Vismaya V

Source of the original text:

Compiled by: Daisy, Mars Finance

The surge in the yen and the skyrocketing of government bond yields may threaten Bitcoin as the Bank of Japan contemplates a policy shift.

As the yen strengthens, the Bank of Japan may adjust its policy direction, and tightening measures may impact cryptocurrency returns. The surge in the yen, coupled with Japanese government bond yields hitting a 30-year high, is sending warning signals to the global market, and Bitcoin may find it difficult to remain unaffected.

This week, the yield on Japan’s 30-year government bonds surged to 2.345%, the highest level since 1994, while the exchange rate of the yen against the US dollar rose to around 153 yen to 1 dollar.

A team of Goldman Sachs analysts led by former Chief Economist of the Bank of Japan, Akira Otani, believes that in the context of the continued strengthening of the yen, the Bank of Japan may soon shift towards tightening its policy.

Goldman Sachs pointed out in a report on Monday that if the yen further appreciates to 130 yen per dollar, the central bank may pause interest rate hikes and lower its inflation forecast for 2026; conversely, if the yen depreciates beyond the 160 threshold, it may be forced to adopt tighter policies.

In either case, global markets are watching, and cryptocurrencies are likely to be one of the first areas to come under pressure.

“Major Turn” of Risk Assets

In an environment of excess liquidity, Bitcoin, which thrives like a fish in water, is facing the risk of capital rotation triggered by rising yields in Japan. Increases in fixed income returns and policy tightening typically lead to institutional funds withdrawing from speculative assets, especially those like Bitcoin that heavily rely on a liquid environment.

Agne Linge, the Growth Director of the decentralized bank WeFi, told Decrypt: “The surge in 30-year government bond yields indicates that Japan’s macroeconomic trend is shifting, which will be a significant turning point for risk assets.”

Apart from capital rotation, Linge warns of deeper structural impacts: “When investors can borrow yen at lower interest rates, arbitrage trading will thrive… As bond yields soar, the demand for borrowing yen to invest in other assets will be constrained.”

Other analysts point out that if Japan further tightens its policies, Bitcoin’s recent stable performance around $85,600 may be difficult to sustain. Aravanan Pandian, founder and CEO of the cryptocurrency exchange KoinBX, told Decrypt that the Bank of Japan’s long-term loose monetary policy has been a key pillar of global risk appetite, but this situation may change.

“If the Bank of Japan terminates or significantly tightens its Yield Curve Control (YCC), it may lead to a large-scale capital backflow, especially withdrawing from crypto assets.” He analyzed that, “Historical data shows that a strengthening yen often signals an increase in risk aversion, which reduces speculative positions in portfolios.”

Yield curve control ( YCC ) is a policy tool used by central banks to keep long-term interest rates at target levels through the buying and selling of government bonds. Pandian added that the impact of Japan’s policy shift extends far beyond the cryptocurrency sector and could “trigger a broad reflection on central bank autonomy and global debt sustainability.”

Not everyone is bullish on digital assets

Against the backdrop of slowing CPI and PPI growth, the Federal Reserve is facing increasing pressure to cut interest rates, which could offset Japan’s hawkish tendencies. Marcin Kazmierczak, co-founder of the modular oracle RedStone, pointed to the last policy shift of the Bank of Japan in 2016 as an example: “Bitcoin initially fell 15% at that time, but rebounded strongly within six months.”

Temporary fluctuations?

Although Goldman Sachs warns that a stronger yen could lead to capital fleeing digital assets, Kazmierczak believes that the current crypto market is more resilient than in previous cycles. “The 21 million supply cap of Bitcoin gives it a unique advantage during monetary policy changes,” he hinted that the current decline may just be a “temporary adjustment rather than a structural shift.”

While focusing on Japan’s policy developments, U.S. economic signals also affected market sentiment. Bitcoin edged higher on Monday as investors digested rising inflation expectations and recession risks. The Federal Reserve survey showed that consumers expect inflation to reach 3.6% in the coming year, 44% expect the unemployment rate to rise, and the anxiety index is the highest since April 2020.

According to CoinGecko data, Bitcoin is currently priced at $85,210, up 0.6% in the last 24 hours and with a weekly increase of 8.2%. The decentralized prediction platform MYRIAD, operated by Decrypt’s parent company DASTAN, shows that 55% of predictors believe Bitcoin will hold the $85,000 mark before Wednesday.