Yen Surge Triggers Margin Cuts and Synchronized Deleveraging

The relationship between the Japanese yen and Bitcoin's price action has been observed for some time now. A recent study by CryptoSlate revealed that a sudden surge in the yen can trigger margin cuts across risk books, causing Bitcoin to sell off even without any crypto-specific news.

This phenomenon is due to the global funding system, where the yen plays a significant role in carry trades. When volatility spikes, market participants cut their exposure, leading to synchronized deleveraging and tighter liquidity. This process can have far-reaching consequences for the cryptocurrency market, making it essential to understand its underlying mechanisms.

Using data from the Bank for International Settlements (BIS), researchers identified a large yen-funded channel that influences global risk conditions. A sudden move in the yen can trigger margin-driven selling across assets, including Bitcoin, even when crypto-specific news stays quiet.