With Bitcoin Under Pressure from a Strong Yen, XRP Leads the Crypto Market

Yen’s Surge Sends Ripples Through Markets as XRP Leads Crypto Gains

Early Friday, the Japanese yen broke past the pivotal 150 level against the U.S. dollar, a move often linked to the unwinding of carry trades. Simultaneously, XRP surged over 5%, outperforming major cryptocurrencies during a Thanksgiving period that saw Bitcoin (BTC) avoid its historically volatile pattern and post modest gains.

Crypto Market Snapshot

Bitcoin traded above $96,000 Friday morning, recovering from Thursday’s low of $93,500. Other major tokens such as Ether (ETH), Solana’s SOL, and Binance’s BNB showed little movement, while Cardano (ADA) rose 3.5%, and Dogecoin (DOGE) slipped 1.2%.

The CoinDesk 20 Index (CD20), a tracker of the top liquid tokens, gained 1.3%, while mid-cap assets like Algorand (ALGO) and Worldcoin (WLD) led with gains of up to 21%, despite a lack of clear drivers behind the rally.

Yen Strength Shakes Risk Sentiment

The yen briefly crossed the psychologically important 150 threshold against the dollar, driven by speculation around a potential December rate hike by the Bank of Japan (BOJ). This expectation stemmed from higher-than-expected Tokyo inflation data, alongside month-end adjustments and thin liquidity due to the U.S. Thanksgiving holiday.

The market is now pricing in a 63% chance of a BOJ rate hike, contrasting with a 67% probability of a Federal Reserve rate cut. Such a shift would make yen-funded carry trades less attractive, as borrowing yen becomes costlier. These trades, typically used to fund riskier assets, unwind when yen borrowing costs rise, potentially driving risk-off sentiment.

Crypto and Macro Interplay

Yen movements often correlate with shifts in broader market risk sentiment, impacting cryptocurrencies like Bitcoin. The yen’s status as a safe-haven currency means its strength can signal a risk-off environment, prompting reduced appetite for risk-sensitive assets.

Recent trends in the Australian dollar/yen (AUD/JPY) exchange rate, a barometer of global risk appetite, have highlighted Bitcoin’s vulnerability to macroeconomic shifts. Earlier this week, a CoinDesk analysis suggested weakening momentum in Bitcoin’s bullish run as the AUD/JPY declined.

This dynamic mirrors a previous scenario where yen strength on BOJ rate hike speculation led to an 8% drop in AUD/JPY and a $20,000 plunge in Bitcoin, underscoring the influence of forex movements on the cryptocurrency market.

XRP Stands Out

Against this macro backdrop, XRP’s 5% surge sets it apart from other major tokens, suggesting unique factors at play in its performance. Its resilience, coupled with Bitcoin’s ability to hold above key levels, highlights the crypto market’s nuanced reaction to broader financial market shifts.

Navigating Uncertainty

As the yen strengthens and macroeconomic factors dominate headlines, crypto markets face a mix of headwinds and opportunities. While Bitcoin remains steady and XRP leads gains, the potential for increased volatility looms, driven by forex dynamics and global monetary policy shifts.