Although the leading cryptocurrency Bitcoin (BTC) rose above $88,000 last week, it has been falling again in recent days.
While BTC has failed to make the expected rise, the Japanese yen is strengthening against BTC amid tariff and recession concerns.
Goldman Sachs noted that the Japanese Yen is a hedge against rising concerns about US tariffs and recession risks, drawing attention to its historical strength in risk-averse environments, Coindesk reported.
Goldman Sachs has described the Japanese yen as the best hedge at a time when talk of a possible recession is increasing, as tariff uncertainties have had a negative impact on both stock and cryptocurrency markets, while also increasing recession fears.
Tariff wars and growing recession concerns have been reflected in Bitcoin’s performance against the yen, with BTC down 1% against the yen on April 2 on Japan-based crypto exchange bitFlyer, according to Goldman Sachs analysts.
“The yen offers investors the best currency protection if the probability of a U.S. recession increases,” said Kamakshya Trivedi, head of markets strategy at Goldman Sachs.
Trivedi emphasized that since Bitcoin is often paired with tech stocks, the tariff-induced risk aversion sentiment on Wall Street could also impact BTC and the crypto market.
Trivedi stated that Goldman Sachs expects the Japanese yen to rise below 140 against the US dollar this year, and argued that the yen will strengthen further.
Trivedi said that the strengthening yen could trigger the unwinding of risk aversion financed by low-interest yen loans, increasing overall market risk aversion, which could negatively impact Bitcoin and the crypto market.
As you may recall, Bitcoin and the crypto market saw this situation in early August of last year when the yen carry trade was unraveled. This led to declines in both stocks and BTC, with BTC falling sharply from about $65,000 to $50,000 in a week.
*This is not investment advice.
