Bitcoin hit a record high of 7.9 million Japanese yen on the Tokyo-based cryptocurrency exchange bitFlyer early Monday, highlighting the Japanese currency’s weakness compared to other major fiat currencies.
While Bitcoin’s dollar-denominated price remains 32% below its all-time high of $69,000 reached in November 2021, the leading cryptocurrency continues to reach new heights against the Japanese yen. This price differential reflects growing stress on the yen stemming from the Bank of Japan’s (BOJ) ongoing monetary stimulus programs amid resurging inflation.
The BOJ has kept interest rates at zero and persisted with bond purchases to inject liquidity into the economy, even as Japan’s core consumer price index, which excludes volatile food and energy prices, climbed to a four-decade high of 3.1% in 2023. This divergence from other major central banks like the Federal Reserve, which raised rates aggressively last year, has weighed heavily on the yen.
The Japanese currency depreciated 13% against the U.S. dollar in 2022 and has already lost another 6.4% year-to-date in 2023. With the BOJ expected to maintain its ultra-easy policy for the foreseeable future, analysts say the yen could weaken further, making Bitcoin and other alternative assets more attractive for Japanese investors seeking to preserve their wealth.
“The yen is facing increasing debasement risks under the BOJ’s yield curve control policy,” said Satoshi Tanaka, economist at Daiwa Securities. “As long as this divergence with the Fed persists, we could see growing flows into inflation hedges like Bitcoin and gold.”
The robust demand has propelled Bitcoin’s premium over gold to record highs in yen terms. Japan, along with Hong Kong and Singapore, is also known to have relatively clear regulations around cryptocurrency trading compared to other developed countries, which could drive more adoption of digital assets if macroeconomic instability persists.
