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First Mover Americas: Bitcoin Draws Premium in Yen Markets, FX Volatility Spikes

The latest moves in crypto markets in context for April 28, 2022.

Mise à jour 10 avr. 2024, 2:25 a.m. Publié 28 avr. 2022, 2:39 p.m. Traduit par IA

10,000 Japanese yen notes (Kiyoshi Hijiki/Getty images)

Good morning, and welcome to First Mover. Here’s what’s happening this morning:

Market Moves: Bitcoin trades at a premium in the Japanese yen markets.
Chartist's Corner: Spike in global FX volatility, boon or curse for bitcoin?

And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.

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Market Moves

Bitcoin (BTC) traded higher for the second day as the yen and euro tanked against the dollar and a gauge of foreign exchange (FX) market volatility hit a two-year high.

The top cryptocurrency by market value neared $40,000, having jumped 3% to $39,000 on Wednesday, CoinDesk data shows. Ether (ETH), the second-largest cryptocurrency, rose 1%, topping $2,900.

The Japanese yen slipped to 130.80 per U.S. dollar, the lowest in 20 years. The currency has fallen more than 10% in seven weeks. While such rapid moves are the norm in crypto markets, they are rare in currency markets and perhaps damaging to nations. Sharp currency depreciation imports inflation and often has domestic investors pouring money into the perceived store of value assets like bitcoin and gold.

Bitcoin has recently been drawing a premium in Japanese yen markets. Still, it may be too early to say that cryptocurrency is the preferred safe haven of investors exposed to the yen's volatility.

"Bitcoin traded at a consistent premium on Japanese markets since the start of April," Dessislava Aubert, analyst at Kaiko Research, told CoinDesk in an email. "However, BTC-JPY trade volumes remained low, which does not indicate a durable increase in demand in local markets."

Aubert added that volumes could pick up if Japan decides to loosen its coin listing regulation.

Bitcoin premium on Japanese markets. (Kaiko Research)

Why is the yen falling?

Experts say increasingly divergent central-bank policies have driven the yen's slide this year. While the U.S. Federal Reserve hiked rates in March and plans to raise rates six more times by year-end, the Bank of Japan has remained committed to money printing.

"The growing monetary policy divergence between the U.S. Fed and the Bank of Japan alongside higher commodities prices have put significant pressure on the Japanese currency with the JPY touching 20-year lows against the U.S. Dollar," Aubert said.

Bitcoin's programmed tightening path

While the Bank of Japan is moving in the opposite direction from the Fed, bitcoin's monetary policy is on a programmed tightening path.

Bitcoin's pace of supply expansion is reduced by 50% every four years, and the so-called "reward halving" is due in 2024, after which the per block reward would drop from 6.25 BTC to 3.125 BTC.

Even so, the cryptocurrency has lost over 40% in five months, mainly due to the Fed rate hike fears.

Declining trading volumes on Liquid, one of the highest volume Japanese exchanges recently acquired by FTX. (Kaiko Research)

Latest Headlines

Spike in Global FX Volatility: Boon or Curse for BTC?

By Omkar Godbole

JPMorgan's global FX volatility index. (Michael Brown, head of intelligence at Caxton Payments, Bloomberg)

The JPMorgan global FX volatility index, which tracks three-month option volatilities, has jumped to a two-year high of 10.20, according to data tracked by Bloomberg.

Bitcoin is widely considered a safe haven and digital gold in the crypto market. So, one may consider the rising FX volatility a boon for cryptocurrency.

However, past data suggests that cryptocurrency does well in a declining FX volatility environment.

Today’s newsletter was edited by Omkar Godbole and produced by Bradley Keoun and Stephen Alpher.

First Mover Markets Trading Investing Bitcoin

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.

Bradley Keoun

Bradley Keoun is CoinDesk's managing editor of tech & protocols, where he oversees a team of reporters covering blockchain technology, and previously ran the global crypto markets team. A two-time Loeb Awards finalist, he previously was chief global finance and economic correspondent for TheStreet and before that worked as an editor and reporter for Bloomberg News in New York and Mexico City, reporting on Wall Street, emerging markets and the energy industry. He started out as a police-beat reporter for the Gainesville Sun in Florida and later worked as a general-assignment reporter for the Chicago Tribune. Originally from Fort Wayne, Indiana, he double-majored in electrical engineering and classical studies as an undergraduate at Duke University and later obtained a master's in journalism from the University of Florida. He is currently based in Austin, Texas, and in his spare time plays guitar, sings in a choir and hikes in the Texas Hill Country. He owns less than $1,000 each of several cryptocurrencies.