The Japanese yen continued its strong surge against the U.S. dollar as investors embraced its role as a safe-haven asset.
The USD/JPY exchange rate plunged to 139.92 on Tuesday, its lowest level since September last year and 11.5% below its highest point in 2024.
This decline aligns with the broader weakness of the U.S. dollar and a surge in other developed-world currencies such as the euro, British pound, and Swiss franc. The US dollar Index, a popular gauge that weighs its performance against a basket of currencies, fell to $98, its lowest point since April 2022.
The ongoing yen rally is having significant ripple effects on equities, Bitcoin, and altcoins. In an X post, BitMEX co-founder Arthur Hayes noted that this performance will push leveraged traders to unwind positions in U.S. stocks and bonds, ultimately leading to higher bond yields.
There are already early signs this is unfolding. U.S. stock prices have sharply declined, with the Nasdaq 100, S&P 500, and Dow Jones indices falling into technical correction territory.
According to the Financial Times, Japanese investors have offloaded over $20 billion in international bonds. Most of these sales were in US government bonds. These activities are watched closely because Japan is the biggest holder of US debt, worth $1.1 trillion.
A key driver behind these sales is the strength of the yen and rising bond yields in Japan. The country’s 10-year government bond yield has risen to 1.30%, sharply higher than the lows seen last year.
Bitcoin is slowly becoming a safe haven
According to Hayes, the surging yen and the plunging US dollar will benefit Bitcoin (BTC) as the Federal Reserve will be forced to print money using quantitative easing.
Meanwhile, there are increasing signs that Bitcoin is gradually evolving into a safe-haven asset. Spot Bitcoin ETFs recorded over $381 million in inflows on Monday, following $107 million on Friday. These inflows coincided with a sharp drop in the Dow Jones Industrial Average, which fell by more than 1,000 points.
Bitcoin has also dropped by less than 3% this year, while the top US indices have fallen by double digits. As such, some analysts believe that it will eventually evolve into a safe-haven asset, similar to gold.
Such a move would lead to higher altcoin prices. Historically, altcoins like Ethereum (ETH), Solana (SOL), and Pepe (PEPE) tend to perform well when Bitcoin is thriving.
