Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.
Bitcoin's yen-denominated price on the Tokyo-based bitFlyer exchange dropped nearly 15%, significantly more than its dollar-denominated price on Western exchanges.The yen's strong performance, rising almost 10% against the USD in three weeks, led to the unwinding of carry trades, contributing to the sell-off in risk assets, including bitcoin.
The Japanese currency has soared nearly 10% against the USD in three weeks, a staggering increase for the world's third-biggest reserve currency and the one preferred by traders worldwide to fund purchases of risk assets.. Some say this contributed to the start of a sell-off in risk assets. Carry is a trading strategy that involves borrowing an asset or currency at a low interest rate, such as the yen, and investing in an asset that provides a higher rate of return.
“Japan has been a source of PNL income from USDJPY longs and Nikkei longs, so the unwinding of these main sources is likely to suggest very muted risk sentiment and risk appetite going forward,” Fan added.
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