🐳 Daily Edition: Japanese Yen Carry Trade Blows Up... Again?

Today began with Bitcoin sliding under $90k briefly before Nvidia’s bullish earnings report pulled the market up with it, with BTC settling out around $92k at time of writing. We’re certainly not out of the woods yet as the rapidly-rising 10-year Treasury yield for Japanese bonds once again puts the “Japanese Yen carry trade” at risk. Even if you haven’t been closely following the economic state of Japan, this phrase likely sounds familiar to Beluga Brief subscribers who have been reading since last year: in August 2024 the exact same thing happened, draining liquidity from markets and taking Bitcoin from $70k to $48k in a single day. In short, as Japan kept their interest rates at or near 0 for decades, investors and institutions could borrow Yen from Japan to then purchase foreign assets whose currencies offered higher yield, commonly US dollars or Treasury Bills. This is as close as you’ll get to “free money” in the real world, that is until Japan’s interest rates begin to rise as they are now. If rates go high enough, the trade becomes unprofitable and starts to unwind, potentially wreaking havoc on markets in the short term.

The good news is with Bitcoin now trading over $90k after reaching highs of $126k just a few weeks ago, we know that the selloff from the carry trade incident is likely to have a short term impact on crypto prices rather than a long term one. Speaking of short term moves, as my Twitter feed is filled with traders crying and calling for the start of a bear market, I thought it prudent to look at how Bitcoin has traded so far this year. To my surprise, this is actually the second time Bitcoin has pulled back 30% off its high this year; the first was in February after Trump announced his first string of tariffs on foreign countries. No matter how bad it looked at the time or how hard it was to stomach the drawdown, BTC went on to surge 65% in just 6 months. It’s never easy to watch the biggest asset in your industry lose hundreds of billions in market cap, but it also doesn’t mean the bull market is over.

We really got a US Congressman wearing a Pudgy Penguin as his PFP before GTA 6

The Beluga intern has been hard at work gathering all the most important crypto news stories so you have them in one place!

The Majors

• New Hampshire unveils $100 million Bitcoin collateralized municipal bond

• Crypto world wipes out $1 trillion as Bitcoin plunges anew

Alt Coins and Stocks

• Crypto exchange Kraken files for IPO following $800 million raise

• Coinbase teases ‘new era’ amid prediction market, stock trading leaks

New Launches

• OKX exchange releases product merging CeFi and DeFi

• This new Bitcoin, crypto wallet scans your blood vessels—and needs zero passwords

Interesting Reads

• Samourai Wallet co-founder William Lonergan Hill sentenced to four years in crypto mixing service case

• Crypto miners in Malaysia stole $1 billion in power over five years

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