Bitcoin remained close to $78,500 on 8 September as the Japanese yen rose to its strongest level since February, keeping the cryptocurrency within its recent range while investors reduced bets against Japan’s currency.
The yen reached 152.89 against the US dollar during Asian trading before weakening to 154.14. The move came ahead of the Bank of Japan’s policy meeting on 17-18 September and raised concerns about the impact of more expensive Japanese funding on global markets.
A stronger yen can put pressure on investors who borrowed the currency to buy overseas assets. If those trades become less profitable, investors may be forced to sell holdings across their portfolios, including cryptocurrency.
The immediate question for Bitcoin is whether buyers can continue absorbing supply if yen-funded strategies unwind and investors become more cautious about risk.
Bitcoin has received support from fresh inflows into exchange-traded funds (ETFs) and from the relatively low acquisition price of recent buyers. However, the market could face a tougher test because recent rallies have been led partly by futures, exchange inventories remain elevated and some investors are sitting on substantial paper profits.
A Jefferies analysis of Bank for International Settlements data estimated that cross-border yen borrowing reached ¥360 trillion ($2.35 trillion) in March.
The so-called carry trade involves borrowing in a currency with low funding costs and investing in assets that offer higher returns. A stronger yen increases the cost of repaying those borrowings when measured against overseas assets, while higher Japanese interest rates can reduce the strategy’s potential profit.
The danger is not limited to investors who directly borrowed yen to buy cryptocurrency. Losses or margin calls in one part of a portfolio can lead to selling elsewhere. A BIS analysis of the market turmoil in August 2024 described how deleveraging and margin pressure spread across asset classes, including crypto.
How markets perform in September will depend on the amount of leverage still in the system, whether margin calls increase and which assets investors decide to sell.
Higher domestic bond yields may also encourage Japanese investors to keep more future capital at home. Reports have pointed to early signs of repatriation, along with a reduction in short-yen positions by leveraged funds and so-called real-money investors.
Reduced overseas purchases and the liquidation of existing positions are separate processes, but both can affect foreign markets. For Bitcoin, a renewed rise in the yen would become more significant if it coincided with broader efforts to reduce risk and weaker demand for the cryptocurrency.
Bitcoin was trading within the $77,200-$82,100 range identified in Bitfinex’s 7 September analysis. Its price near $78,500 suggested the market was consolidating during the initial phase of the currency pressure.
ETF demand provides support
Farside Investors recorded net inflows of $730.8m into US spot Bitcoin ETFs on 3 September, followed by a further $174.6m on 4 September. Those completed trading sessions showed demand through an important investment channel, although the strength of buying after those dates remained unclear.
Bitfinex also highlighted an expanding supply of stablecoins and described the market as consolidating with an upward bias. It warned, however, that higher yields could restrict further gains.
Glassnode’s 2 September report placed the average cost basis for short-term holders at about $71,000. With Bitcoin trading above that level, those investors still had a cushion before their average holdings moved into a loss.
ETF inflows provide evidence of direct demand, while the lower cost basis gives recent buyers room to withstand a fall before their positions become unprofitable. Together, those factors help explain why the market has so far absorbed selling pressure.
There are also signs that derivatives have played a significant role in the latest move. CryptoQuant contributor Carmelo Aleman reported that aggregate open interest increased from $25.2bn to $27.5bn during the 3 September session. He said derivatives were the main initial driver, while later recognising participation from spot and on-chain markets.
Dollar-denominated open interest represents the value of outstanding positions, although a trader’s risk of forced closure also depends on the collateral supporting those positions and the level of leverage being used.
A rally driven primarily by derivatives can become vulnerable if prices reverse and traders reduce leverage before spot-market buyers are ready to absorb the resulting supply.
CryptoQuant contributor CW8900 reported negative spot-demand readings despite continued buying by large investors. XWIN Japan’s 8 September notes also identified negative apparent demand even as ETFs continued to accumulate Bitcoin.
Those measures suggest that visible buying has not translated into consistently strong demand across the wider market. At the same time, CryptoQuant’s CQ Research said spot trading volume during the recovery had risen to roughly three or four times its early-August lows, with whale activity on exchanges also increasing.
Higher turnover confirms that more Bitcoin is changing hands, but it reflects both buyers and sellers and does not establish which side is in control.
If ETF purchases slow while derivatives positions shrink, other buyers would need to absorb more supply to keep Bitcoin within its current range. Renewed yen strength could expose that imbalance if it encouraged investors to cut risk.
CryptoQuant contributor IT Tech said short-term-holder whale unrealised profits exceeded $9bn on 4 September, the highest level recorded by that measure since records began in 2016. The figure fell to $7.5bn on 5 September, demonstrating how quickly a paper gain can diminish when valuations change.
XWIN Japan’s 8 September report estimated that Bitcoin reserves on Binance were between 685,000 and 687,000 BTC. Its 30 August report had identified approximately 687,000 BTC as a 2026 high at that point.
Changes in custody, wallet activity, market-making operations and the use of Bitcoin as derivatives collateral can all affect exchange reserves, meaning the figures do not reveal with certainty whether holders intend to sell.
Two on-chain indicators may offer a clearer picture of potential pressure and changes in holder behaviour.
The latest short-term-holder SOPR reading available on 8 September was approximately 1.003, according to Glassnode. The measure compares the value of spent outputs that are less than 155 days old with their value when they were acquired.
Sustained readings below one would show that recently acquired coins were, in aggregate, being spent at a loss. That could indicate stress among active short-term holders even while the wider group remained above its average purchase price.
The cost-basis estimate of about $71,000 from Glassnode’s 2 September report shows where the average short-term holder bought Bitcoin. A sustained fall below that level would place the cohort’s average position underwater.
The spending and cost-basis indicators can deteriorate at different times. Monitoring both helps distinguish ordinary market weakness from broader capitulation rather than treating every move below a chosen price as proof of panic.
Bank of Japan decision in focus
The Bank of Japan is due to meet on 17-18 September, with its policy statement scheduled for 18 September. Tokyo Tanshi’s 8 September report put the probability of a 25-basis-point increase to 1.25% at 97%.
Because the rate rise is already so heavily priced into markets, guidance on the pace of future tightening may be as important as the decision itself.
A rate increase accompanied by a cautious outlook could disappoint investors who are betting on further yen gains. Conversely, guidance suggesting faster tightening could reinforce the currency’s strength and increase pressure on carry trades.
A surprise decision to leave rates unchanged could reverse some of the yen’s recent advance, but any benefit to Bitcoin would depend on how broader markets responded.
Bitcoin’s next test would be more serious if renewed yen strength arrived alongside weaker ETF demand, falling leveraged positions and sustained losses among recent buyers.
If buying continues and leveraged positions are reduced in an orderly way, it would support the view that the market can withstand more expensive Japanese funding. The key evidence will be whether buyers continue to absorb available supply and whether recent holders choose to protect gains or realise losses.
Bitcoin was up 1.66% over the previous 24 hours and remained the world’s largest cryptocurrency by market capitalisation, ranked number one.
Gino Matos, a law school graduate and journalist with six years of experience in the cryptocurrency industry, focuses primarily on Brazilian blockchain developments. Oluwapelumi writes about Bitcoin, decentralised finance, hacks, mining and crypto culture, with an emphasis on the technology’s transformative potential.
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