Bitcoin News
By Bruce Buterin
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Carry Trade Logic Takes a Hit. The carry trade is pretty much a staple of forex markets.
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What's Driving Bitcoin's Independent Streak. A few things could be at play here. One possibility is that Bitcoin is absorbing investor anxiety…
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Portfolio Implications Are Real. For investors thinking about diversification, a -0.90 correlation between Bitcoin and USD/JPY is…
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Bitcoin is doing something weird. Over the past 52 weeks, it's been running a -0.90 correlation with the USD/JPY currency pair — one of the tightest negative relationships…
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The number itself is striking. A -0.90 correlation basically means that when Bitcoin climbs, USD/JPY tends to fall, and when USD/JPY pushes higher, Bitcoin tends to slide.
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The carry trade is pretty much a staple of forex markets. You borrow in a low-interest-rate currency — historically the Japanese yen — and park that money somewhere with a higher…
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Traders who run carry strategies tied to the yen have traditionally operated within a fairly predictable set of correlations.
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If you're long USD/JPY as part of a carry position, and Bitcoin is moving sharply in the opposite direction, you've got a new variable in the room.
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And that's the part that's hard to map cleanly. Nobody's put out a definitive explanation for why this relationship is so tight right now.
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A few things could be at play here. One possibility is that Bitcoin is absorbing investor anxiety about global economic conditions in a way that fiat currencies simply aren't.
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See also: Bitcoin Bottom Call From Samson Mow Splits Market as Four-Year Cycle Gets Questioned
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That kind of behavior would naturally push Bitcoin in a different direction from USD/JPY, which is deeply tied to interest rate differentials between the U.S. and Japan.
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The cryptocurrency community's own internal dynamics matter too. Sentiment within crypto markets can move fast and hard, sometimes detached from what's happening in equities or…
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Still, the absence of a clear institutional explanation is notable. Analysts will keep digging. The data is too clean to dismiss.
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For investors thinking about diversification, a -0.90 correlation between Bitcoin and USD/JPY is actually kind of useful information — if you trust it to persist.
The Currency Analytics
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