March 27, 2024
Bitcoin-Yen Pair Hits Record High in Japan
Latest Cryptocurrency News

Bitcoin-Yen Pair Hits Record High in Japan

Fiat currencies such as the U.S. dollar, Japanese yen, and euro are inherently unbacked by hard assets, and their valuation is subjective, contingent upon prevailing market sentiments. The recent surge in Bitcoin’s (BTC) value underscores the present market perceptions, particularly highlighting the yen’s (JPY) vulnerability among major fiat currencies.

On a recent Monday, the premier cryptocurrency often likened to digital gold, achieved a historic high of 7.9 million yen on the Tokyo-based cryptocurrency exchange bitFLYER. In stark contrast, its dollar-denominated price stood at over $52,000, reflecting a 32% shortfall from the November 2021 peak of $69,000, as per TradingView data.

This price dissonance mirrors the strain on the Japanese yen, stemming from the Bank of Japan’s (BOJ) persistent liquidity easing, resurging inflation, and indicators of economic frailty. The Japanese economy slid into recession at the close of the previous year, trailing behind Germany to claim the fourth position.

While the Federal Reserve and other central banks aggressively hiked interest rates in 2022 and 2023 to curb inflation, the BOJ maintained zero interest rates and continued massive fiat currency printing. In 2023, Japan’s core inflation, excluding volatile food and energy components, soared by 3.1%, marking its most substantial increase since 1982. Inflation erodes the purchasing power of fiat currencies, prompting a shift towards alternative assets like bitcoin and gold with store-of-value characteristics.

The yen experienced a 13% and 7.5% depreciation against the dollar and has further declined by 6.4% this year. The potential for Bitcoin to sustain a premium in Japanese yen terms persists unless the Bank of Japan expedites its planned departure from the ultra-easy monetary policy, making the yen comparatively attractive against other assets.

Image by tawatchai07 on Freepik

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