Bitcoin’s ambition to break free is faltering against the Yen, a potential sign that broader market anxieties are brewing as Goldman Sachs bets big on the Japanese currency as the definitive refuge from looming US economic uncertainties.
After bumping its head against a key trendline resistance formed since January, Bitcoin took a 1% hit against the yen on Wednesday, trading on Japan’s bitFlyer platform. This dip coincided with Goldman Sachs spotlighting the yen as the premier safe-haven asset as recession fears in the US escalate, stoked by President Trump’s freshly implemented tariffs.
Dubbed “Liberation Day” tariffs, these trade measures are heightening concerns of a global trade war and nudging financial giants like JPMorgan and Goldman Sachs to revise upwards their probabilities of a US recession. While pockets of the crypto world still tout Bitcoin as a digital safe harbor, Goldman is throwing its weight behind the yen, pointing to its proven track record as a reliable shelter during economic storms.
Kamakshya Trivedi, Goldman Sachs’ head of global foreign exchange strategy, articulated the yen’s appeal, stating it’s “the best currency hedge should the chances of a US recession increase.” Trivedi further emphasized that the yen serves as a “very good hedge” against a weakening US labor market and historically thrives when both US real interest rates and equity values decline simultaneously.
It’s worth recalling that Bitcoin often mirrors the movements of technology stocks; consequently, tariff-induced volatility on Wall Street could easily spill over into cryptocurrency markets. Adding to the risk, a stronger yen might trigger a domino effect of unwinding risky trades financed by cheap yen loans, amplifying overall market risk aversion. A stark reminder of this dynamic played out last August when a yen-related carry trade unwinding sent Bitcoin plummeting from approximately $65,000 to $50,000 within a week.
Goldman Sachs anticipates the yen strengthening to the low 140s against the dollar this year. At press time, the USD/JPY pair was trading at 149.77. This projection aligns with the contracting spread between yields on 10-year US and Japanese bonds, which recently touched its narrowest point since August 2022—a telltale sign of strengthening yen sentiment.