QCP: US-Japan Unprecedented Joint FX Intervention, Yen, Long-Term Treasury Yields Could Become New Variables for Crypto Market Liquidity

August 3rd. In a statement released by QCP Capital, it was revealed that the U.S. and Japan jointly intervened in the foreign exchange market last Friday. A New York Fed representative acting on behalf of the U.S. Treasury bought Japanese yen, marking the first U.S.-Japan coordinated foreign exchange intervention since 2011 and the first joint action specifically supporting the yen since 1998.

QCP pointed out that this move refocused the market on long-term U.S. bond yields, with the 30-year Treasury yield rising to around 5.27%, reaching a new high since 2007. The 10-year breakeven inflation rate remained around 2.28%, and market attention has shifted to U.S. bond issuance, investor demand, and cross-border fund flows.

For the crypto market, a rapid appreciation of the yen may trigger unwinding of yen-funded trades, affecting risk assets such as BTC and ETH. However, if the yen exchange rate stabilizes, it could help reduce the need for further interventions, alleviating liquidity pressures in the U.S. bond market.

Overall, this intervention does not present a clear directional signal for crypto assets. Still, it underscores that the USD/JPY exchange rate, Japan's funding environment, and long-term U.S. bond yields are becoming significant factors influencing the liquidity environment for BTC and ETH.