Yen at 40-year low and Fed is hiking — short Bitcoin and risk assets
The Japanese yen has crashed to its lowest level in 40 years, and one of Wall Street's biggest firms is warning that the new Fed chair is prepared to keep raising interest rates. This combination of a weaker yen and higher U.S. rates is crushing risk assets — even Bitcoin is dangling near $60,000 as investors flee.
Idea
The Japanese yen has collapsed to a 40-year low against the dollar, which historically signals major global stress as Japanese investors pull money out of overseas assets. At the same time, Citadel Securities is warning that investors are underestimating Fed Chair Warsh's determination to fight inflation with more rate hikes. When you combine a crashing yen with rising U.S. rate hike expectations, the cost of borrowing globally shoots up and forces investors to dump risk assets like Bitcoin. Bitcoin is already clinging to key support with $1.8 billion in ETF outflows — this macro setup suggests another leg lower is likely.
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News sources
- Bitcoin clings to key support level as weekly US spot ETF outflows hit $1.8B and Fed rate hike bets mount: analysts — The Block
- Citadel Securities Warns of 'Shifting Landscape' Under Warsh Fed — Bloomberg
- June Payrolls Expected to Boost Rate-Hike Bets — Bloomberg
- Yen Hits Four-Decade Low in Historic Slide That's Rattled Japan — Bloomberg