XRP Outperforms Crypto Majors as Japan Yen Strength Signals Bitcoin Trouble

Yen breached the key 150 level against dollars early Friday, a move that has previously catalyzed the unwinding of carry trades.

Updated Nov 29, 2024, 5:12 a.m. Published Nov 29, 2024, 5:11 a.m.

XRP tokens surged more than 5% in the past 24 hours to drive gains among majors in the past 24 hours as a Thanksgiving holiday saw bitcoin (BTC) avoid a feared historical “massacre,” with a slight uptick across the market.

BTC rose above $96,000 in the early hours Friday, a steady rise from Thursday’s lows of $93,500. Ether (ETH), Solana’s SOL, and BNB were little changed, Cardano’s ADA moved 3.5%, and dogecoin (DOGE) lost 1.2%.

The broad-based CoinDesk 20 (CD20), a liquid fund tracking major tokens, added 1.3%. Algorand’s ALGO and Worldcoin’s WLD jumped as much as 21% to lead gains among midcaps on no immediate catalysts.

The crypto market’s moves in Asian hours came as the Japanese yen broke a key level against U.S. dollars.

The yen briefly strengthened past 150 against the dollar due to expectations of a Bank of Japan (BOJ) rate increase in December, spurred by higher-than-expected Tokyo inflation data. The movement was likely accentuated by month-end financial adjustments and low liquidity due to Thanksgiving.

Market sentiment leans towards a 63% chance of a BOJ rate hike, contrasting with a 67% likelihood of a Fed rate cut, which could reduce the attractiveness of yen carry trades.

Yen is colloquially known as an "anti-risk" currency and is seen as a safe-haven currency that investors turn to during times of stress.

Yen's outperformance at the end of July and September has previously catalyzed the unwinding of carry trades, or bullish risk-on bets, financed by relatively cheap yen-denominated loans as it became more expensive to borrow the Japanese currency.

A CoinDesk analysis earlier this week signaled bitcoin's bullish run has weakened, with the Aussie dollar/Yen exchange rate dropping, signaling a risk-off mood. The AUD, linked to global economic health, and the yen tend to affect risk assets like BTC inversely.

This scenario echoes an earlier period when a yen surge due to BOJ rate hike rumors led to an 8% drop in AUD/JPY and a $20,000 fall in BTC, showing the potential impact of FX movements on cryptocurrencies.

Shaurya Malwa

Shaurya is the Co-Leader of the CoinDesk tokens and data team in Asia with a focus on crypto derivatives, DeFi, market microstructure, and protocol analysis. Shaurya holds over $1,000 in BTC, ETH, SOL, AVAX, SUSHI, CRV, NEAR, YFI, YFII, SHIB, DOGE, USDT, USDC, BNB, MANA, MLN, LINK, XMR, ALGO, VET, CAKE, AAVE, COMP, ROOK, TRX, SNX, RUNE, FTM, ZIL, KSM, ENJ, CKB, JOE, GHST, PERP, BTRFLY, OHM, BANANA, ROME, BURGER, SPIRIT, and ORCA. He provides over $1,000 to liquidity pools on Compound, Curve, SushiSwap, PancakeSwap, BurgerSwap, Orca, AnySwap, SpiritSwap, Rook Protocol, Yearn Finance, Synthetix, Harvest, Redacted Cartel, OlympusDAO, Rome, Trader Joe, and SUN.