This makes Bitcoin fall as if there is big negative sentiment, even though the crypto news is quiet
JAKARTA – Bitcoin sometimes experiences sharp declines even when there is no major news from the crypto industry. One recurring trigger actually comes from outside the crypto market, namely the unwinding of yen-based carry trades.
The mechanism is relatively straightforward. For years, the yen has been used as a funding currency because of its low interest rates. This cheap capital is then channelled into riskier assets offering higher returns, including equities, credit, and crypto.
Problems arise when USD/JPY moves quickly and sharply. Such conditions trigger margin tightening, reductions in risk limits (Value-at-Risk/VaR), and forced deleveraging. When this happens, investors are compelled to unwind carry trade positions simultaneously.
According to Cryptoslate, this unwinding causes bitcoin to correct as if there were major negative sentiment, even when crypto news is relatively quiet. The pressure does not stem from crypto fundamentals but from falling liquidity, wider spreads, and rapid closure of derivative positions.
Warning signals from Japanese authorities heighten market sensitivity. On 12 February 2026, Japan’s top currency diplomat, Atsushi Mimura, said the government was “not lowering its guard” regarding yen exchange rate volatility, monitoring markets with high urgency and coordinating closely with US authorities.
When communication takes this tone, market participants typically become more alert to the risk of intervention. As a result, carry trade positions tend to be cut more quickly and earlier, especially when exchange rate movements are seen as “too extreme.”
The scale is not small. Data from the Bank for International Settlements (BIS) shows yen-denominated loans to non-bank entities outside Japan reached around ¥40 trillion in March 2024, equivalent to roughly US$250 billion. With such size, a carry trade reversal has the potential to affect global risk conditions, including crypto.
The impact on bitcoin is mechanical. Pressure usually begins in the foreign exchange market, then spreads to equities and credit through surging volatility and tighter risk limits, before eventually weighing on crypto prices through broad deleveraging flows.
Bitcoin’s movement may appear isolated at first. However, when traced through shifts in funding conditions and cross-asset volatility, such declines often align with waves of global deleveraging. (DK/LM)
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