CandleFocus

Bitcoin and Nasdaq Could Stabilize as Bull Positioning in Yen Appears Stretched

Author: Content Editor
The recent decline in the Nasdaq and bitcoin coincides with a rise in Japanese government bond yields and the strengthening of the safe-haven Japanese yen. The low-yielding yen has historically propped up global asset prices, and the current rise in the yen may have contributed to risk aversion in the markets. However, the bullish positioning in the yen appears to be overstretched, which could lead to a quick bearish reversal and offer relief to risk assets. Japanese investors using the NISA scheme to buy foreign assets during risk-off could slow the pace of yen appreciation. The historical trend suggests that a renewed risk-on sentiment could benefit Nasdaq and bitcoin. At present, bitcoin is trading near $80,300 with a month-to-date decline of nearly 5%. The USD/JPY pair is at 147.23, with a five-month low of 145.53. Even though there may be relief ahead, the broader bullish outlook for JPY may remain unchanged due to a narrowing U.S.-Japanese bond yield differential. Risk asset bulls need to be vigilant for signs of volatility in the yen and the broader financial markets.

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