XRP saw a significant increase of over 5% in the past 24 hours, leading gains among major cryptocurrencies as the Thanksgiving holiday passed without the dreaded “massacre” for Bitcoin (BTC). BTC managed to maintain a steady rise above $96,000 in the early hours of Friday, recovering from Thursday’s lows of $93,500. Meanwhile, other major cryptocurrencies like Ether (ETH), Solana’s SOL, and BNB remained relatively stable, with Cardano’s ADA posting a 3.5% gain and Dogecoin (DOGE) experiencing a 1.2% decline.
The CoinDesk 20 (CD20), which tracks major tokens, recorded a 1.3% increase, with midcap tokens like Algorand’s ALGO and Worldcoin’s WLD surging by as much as 21% without any significant catalysts driving the gains. These market movements in the Asian trading hours coincided with a key development in the foreign exchange market, as the Japanese yen crossed the 150 mark against the US dollar.
This movement was fueled by speculation of a potential rate hike by the Bank of Japan (BOJ) in December, following higher-than-expected inflation data in Tokyo. The yen’s status as a safe-haven currency and its reputation as an “anti-risk” asset led to increased demand amidst month-end financial adjustments and lower liquidity due to the Thanksgiving holiday.
Market sentiment currently suggests a 63% probability of a BOJ rate hike, in contrast to a 67% likelihood of a rate cut by the Federal Reserve. This disparity could impact yen carry trades, where investors borrow yen at low interest rates to fund riskier investments in higher-yielding assets. A potential rate hike by the BOJ could make yen-denominated loans more expensive, affecting the attractiveness of carry trades.
The correlation between the yen’s performance and the cryptocurrency market was highlighted in a recent CoinDesk analysis, which indicated a weakening bullish trend for Bitcoin. A shift in the AUD/JPY exchange rate, influenced by global economic health indicators, could signal a risk-off sentiment in the market. Historically, a surge in the yen has triggered unwinding of carry trades, leading to a decline in risk assets like BTC.
The impact of foreign exchange movements on cryptocurrencies was evident in previous instances when rumors of a BOJ rate hike caused significant fluctuations in the AUD/JPY pair, resulting in a substantial drop in Bitcoin prices. As investors navigate through these market dynamics, the interplay between traditional currencies and digital assets continues to shape the overall landscape of the crypto market.