Bitcoin holds near $78,500 as a surging Japanese yen threatens global risk assets

Bitcoin held near $78,500 on Sept. 8 as the Japanese yen touched its strongest level since February, leaving BTC inside its recent trading range while investors cut bets against Japan’s currency.

The yen reached 152.89 per dollar during Asian trading before retreating to 154.14, easing part of the currency pressure ahead of the Bank of Japan’s Sept. 17-18 meeting. A stronger yen can squeeze investors who borrowed it to buy foreign assets, potentially prompting sales across their portfolios.

The question is whether Bitcoin’s buyers can keep absorbing supply if Japanese funding becomes more expensive and investors reduce risk across their portfolios.

ETF inflows and a lower acquisition cost for recent holders offer some support. Futures-led rallies, elevated exchange inventory and large paper profits leave that support open to a harder test.

What the yen move can transmit

Cross-border yen borrowing reached ¥360 trillion ($2.35 trillion) in March, according to a Jefferies analysis of BIS data.

A carry trade borrows in a low-cost currency to buy assets offering higher returns, and a stronger yen raises the cost of repaying yen liabilities when measured against foreign assets. Higher Japanese interest rates can also narrow the strategy's return.