Yen & Bitcoin

Japan is now the biggest U.S. Treasury holder in the world, with approximately $1.2Tn. It’s the 4th largest economy in the world, and by far, the most indebted. Whatever happens to their economy, affects the world in a meaningful way, and they’re now at a crossroads. Their massive pile of debt is reflecting on its yield the inflationary pressures caused by economic stimuli, and their currency, remains weak, with the potential to weaken even further. The link to the U.S. economy through their treasury is clear, but the Yen Carry Trade is also meaningful, and is creating cause-effect relationships they were not evident. In the chart below you can see that Bitcoin is moving in tandem with the Yen, which implies that a big investor (SoftBank?) is funding its Bitcoin investments with the Yen. If the BoJ were to decide to not only stop buying Treasuries, but sell part of their pile, and repatriate that to their economy, strengthening the Yen or stopping its weakening, bitcoin could fall even further, and other US assets as well, creating a chain reaction with deep implications for the world economy. Bitcoin may just be the tip of the iceberg.

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