First Mover Americas: Bitcoin Trades at Discount in Japanese Yen Markets

The latest moves in crypto markets in context for March 30, 2022.

AccessTimeIconMar 30, 2022 at 1:31 p.m. UTC
Updated May 11, 2023 at 4:03 p.m. UTC

Good morning, and welcome to First Mover, our daily newsletter putting the latest moves in crypto markets in context. Sign up here to get it in your inbox each weekday morning.

Here’s what’s happening this morning:

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    • Market Moves: Bitcoin trades at a discount in the JPY markets.
    • Derivatives Insight: Open interest in AAVE soars.

    And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.

    • Damanick Dantes, markets reporter, CoinDesk
    • Charlotte Principato, financial services analyst, Morning Consult
    • Rep. Stephen Lynch, Massachusetts (D)

    Market Moves

    By Omkar Godbole

    While the Japanese yen's recent slide has scared the country's energy buyers, the investor community seems to be impervious to the heightened fiat currency volatility.

    The yen depreciated 8% to 125 per U.S. dollar in three weeks ended on Monday before recovering to 121 per dollar early today, although it is still down 6% for the month and the year. Several analysts are worried that the Federal Reserve's plans to deliver rapid-fire rate hikes and the Bank of Japan's persistent easing bias could see the yen weakening to 150 per dollar within 12 months.

    Even so, bitcoin is trading at a discount in the Japanese yen market, according to data tracked by Paris-based Kaiko Research. The spread between the BTC/USD and BTC/JPY markets flipped to negative early this month as the yen started to lose ground.

    In other words, bitcoin doesn't seem to be drawing sasfe-haven bids from investors exposed to the slide in the Japanese yen. The cryptocurrency is widely perceived as a gold-like store-of-value asset and traded at a 6% premium on Binance’s Ukrainian hryvnia (UAH) market following Russia's invasion in February.

    According to Daisuke Kobayashi, strategic financial officer at Tokyo-based fintech software and IT business systems provider xWIN, the widespread belief that a weak yen is a boon for stock markets seems to be keeping haven demand for bitcoin under check.

    "Only a few Japanese investors have noticed [the yen fall]," Kobayashi told CoinDesk in a LinkedIn chat. "There is also a welcoming mood, which is wrong, as they believe that a weaker yen will raise the price of stocks."

    Bitcoin trades at a discount in JPY markets. (Kaiko)
    Bitcoin trades at a discount in JPY markets. (Kaiko)

    Historically, there has been a near-linear relationship between the yen and Japanese stocks. BOJ governor Haruhiko Kuroda told Parliament last week that "there is no change to my view that a weak yen is generally positive for Japan’s economy."

    Thus, the absence of premium in the BTC/JPY market is not surprising – more so as the yen is a G-7 currency and a far stronger unit than Ukraine's hryvnia, considering it is backed by forex reserves of $1.38 trillion, the second largest in the world. Further, according to Kobayashi, crypto forms a small portion of an average Japanese investor's portfolio.

    "The 1.18 trillion yen ($9.8 billion) worth of cryptocurrency held by users at Japanese exchanges as of January was also a fraction of Coinbase's $278 billion in December," a Nikkei Asia article dated March 22 said.

    That said, crypto adoption may boom, not just in Japan, but also elsewhere in Asia and other parts of the world, if the rising bond yields force the Bank of Japan to abandon its six-year-old yield curve control program, under which it allows the 10-year government bond yields to move 25 basis points (0.25 percentage point) around the 0% target.

    The BOJ has led the Fed and other advanced nation central banks in implementing extra ordinary measures by a decade or so. Besides, the curve control program running since 2016 has indirectly kept yields under control in Asia and in advanced nations. Hence, if the Japanese central bank abandons curve control, there could be a sharp rise in yields and risk aversion. Perhaps, markets may take that as a hint of an eventual failure of unconventional tools across the globe.

    The 10-year Japanese yield has recently challenged the 0.25% mark several times, because of inflation fears and rising global yields. The two-year German yield has turned positive for the first time since 2015.

    That has forced the BOJ to step up purchases. Early Monday, the BOJ said it would buy unlimited bonds for four days to ensure the yield remains under 0.25%. The central bank can keep printing money for decades, but will the market react as intended? The law of diminishing marginal utility seems to be catching up, as evident from the upticks in bond yields.

    Investors can no longer ignore the developments in Japan.

    USD/JPY versus MSCI Japan index/MSCI World Index (Bloomberg)
    USD/JPY versus MSCI Japan index/MSCI World Index (Bloomberg)

    Latest Headlines

    Open Interest in AAVE Soars

    By Omkar Godbole

    Data tracked by IntoTheBlock shows the dollar value locked in the number of open positions in perpetual futures contracts tied to AAVE, the native token of Aave protocol, has risen to a multi-month high of $220.6 million.

    Daily volume in the perpetuals market has jumped to $1.34 billion, the highest since Oct. 27.

    The combination of rising open interest along with a sustained uptick in the token's price suggests a considerable number of long positions are being opened, IntoTheBlock said in its Telegram channel.

    AAVE was trading near $235 at press time, representing a 17% gain on the day. The token has doubled in two weeks.

    Open interest in AAVE (IntoTheBlock)
    Open interest in AAVE (IntoTheBlock)


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    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Omkar Godbole

    Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

    Parikshit Mishra

    Parikshit Mishra is CoinDesk's Deputy Managing Editor responsible for breaking news coverage. He does not have any crypto holdings.