Hedge Funds Bet on a Stronger Yen: Will Bitcoin Feel It?

Hedge funds are increasingly positioning for a stronger Japanese yen, with options markets indicating expectations of a dollar‑yen rate below 150 by the end of the year and, in some longer‑dated contracts, as low as 140.

Options Market Signals

Data from the Chicago Mercantile Exchange (CME) shows the most active dollar‑yen contract was a November put option with a strike of 142.86. Puts expiring by year‑end outnumbered calls by more than three to one, reflecting bets on a weaker dollar.

Recent Yen Movements

The dollar‑yen pair fell nearly 5 % in the week ending Tuesday before partially recovering, according to Bloomberg. Three weeks earlier the pair was near 159, and Japanese investors were still adding to carry trades, net buying over ¥5 trillion of foreign assets in the two weeks to 15 August. Rising Japanese inflation and hawkish comments from Bank of Japan officials have since pushed the pair below 155, a level that survived a Ministry of Finance intervention in May. The pair traded around 153.44 on Wednesday, down 2.1 % for the year.

Potential Impact on Bitcoin

Bitcoin (BTC) has so far absorbed the yen’s appreciation, holding near $78,848 and up 0.26 % over 24 hours. A stronger yen could raise repayment costs for investors who borrowed yen to fund dollar‑denominated crypto positions. Higher Japanese bond yields also make yen‑denominated assets more attractive, potentially prompting a unwind of leveraged positions in risk assets.

Outlook

Nomura reports macro funds are concentrating on the 150‑152 zone, with some 12‑month structures targeting 140. Bitcoin’s resilience may depend on how quickly the Bank of Japan’s upcoming policy decision aligns with market expectations.