Goldman Sachs Sees Yen Weakening to 165, Boosting Bitcoin Carry Trades

Goldman Sachs has predicted that the Japanese yen will weaken further against the US dollar, potentially triggering a rally in Bitcoin and other cryptocurrencies. According to Goldman Sachs, the USD/JPY pair is expected to reach 165 within a year, up from its earlier estimate of 155. The bank attributes this weakening to Japan's interest rate differential with the US.

The yen has been under pressure due to mounting concerns over rising fiscal spending and heavier government borrowing in Japan. This has led to higher-for-longer US Treasury yields, which have contributed to the yen's decline. As a result, Bitcoin and other risk assets may become more attractive as carry trades, where investors borrow yen to invest in higher-yielding assets.

Bitcoin has already staged a notable recovery in recent sessions, climbing above $63,000 amid July's seasonality and US Fed-driven liquidity. The price rebounded above the 200-week moving average, but broader crypto sentiment remains mixed. Investors are watching USD/JPY closely, as further yen weakening could sustain the rally.