Bitcoin-Yen Pair Hits Record High, Reflects Stress on Japan's Fiat Currency

Bitcoin's ongoing rally is telling of current market perceptions about fiat currencies, with sentiment being weakest for the Japanese yen.

AccessTimeIconFeb 15, 2024 at 6:07 a.m. UTC
Updated Feb 15, 2024 at 12:50 p.m. UTC
  • Bitcoin reached a record high in Yen terms early Thursday, leaving behind bitcoin's U.S. dollar-, euro-, British pound- and Australian dollar-denominated prices.
  • Continued money printing by Bank of Japan and resurgent inflation have weakened sentiment around the Japanese yen.

Fiat currencies like the U.S. dollar, Japanese yen, euro, and others are not backed by a hard asset, and their value is subjective and depends entirely on market perceptions at any point. Bitcoin’s (BTC) ongoing rally is telling of current market perceptions, with sentiment being weakest for the yen (JPY) among major fiat currencies.

For instance, early Monday, the leading cryptocurrency, often considered digital gold, hit a new record high of 7.9 million yen on Tokyo-based cryptocurrency exchange bitFLYER. In contrast, the cryptocurrency’s dollar-denominated price stood above $52,000 or 32% short of the record high of $69,000 reached in November 2021, according to data from the charting platform TradingView.

The price differential reflects relative stress on the Japanese yen, stemming from the Bank of Japan's (BOJ) continued liquidity easing, resurgent inflation and signs of economic weakness. The Japanese economy slipped into an economic recession at the end of the last year, slipping to fourth place behind Germany.

While the Federal Reserve and other central banks raised interest rates aggressively in 2022 and 2023 to tame inflation, the BOJ kept interest rates at zero and continued printing tons of fiat money.

Japan’s core inflation, which excludes the volatile food and energy component from the consumer price index, climbed 3.1% in 2023, marking its biggest gain since 1982. Inflation erodes the purchasing power of fiat currencies and catalyzes investments into alternative assets with store-of-value appeals like bitcoin and gold.

The yen depreciated 13% and 7.5% against the dollar and is down another 6.4% this year. Bitcoin could continue to trade at a premium in the Japanese yen terms unless the Bank of Japan accelerates the planned exit from the ultra-easy monetary policy, making it relatively attractive to hold the yen over other assets.

Note that Japan, Hong Kong, and Singapore are known to have better legal clarity regarding digital assets trading than other developed markets. That, coupled with persistent volatility in fiat currencies, could foster the growth of alternative assets like cryptocurrencies in these regions.

BTC trades at record highs against the Japanese yen. (TradingView)
BTC trades at record highs against the Japanese yen. (TradingView) (TradingView)

Edited by Parikshit Mishra.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

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.

Read more about