The Japanese yen has weakened to historic lows against the US dollar, trading near 158 on the USD/JPY exchange rate. This mirrors levels last seen in the late 1980s, as per Barchart data.
This slump is reviving the global yen carry trade, where investors borrow cheap yen and use funds to buy higher-yielding assets abroad. The strategy has historically pushed more liquidity into markets, coinciding with strong rallies in risk assets like Bitcoin and tech-heavy markets.
Past cycles suggest that this liquidity flow may again coincide with a strong rally in crypto assets. During the pandemic, when the yen was weak, Bitcoin surged from $10,000 to nearly $69,000. Raoul Pal notes that Bitcoin's price movements have historically been closely related to global liquidity.