Hedge funds are accumulating bullish positions on the Japanese yen, targeting a dollar-yen rate below 150 by year-end, and as low as 140 for longer-dated trades. The dollar-yen pair dropped nearly 5% in one week, falling from 159 to around 153.44, as investors rapidly unwound yen-funded carry trades. This shift occurred despite Japanese investors buying more than 5 trillion yen of foreign assets in the two weeks leading up to mid-August. Bitcoin holds near $78,848, but a stronger yen raises repayment costs for those who borrowed yen to fund crypto positions. The Bank of Japan’s September decision will determine whether bitcoin stays insulated or must absorb forced selling.
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