Is Bitcoin About to Break Its All-Time High? The Overlooked Yen Depreciation Trend May Be the Key CatalystDespite gold and the S&P 500 recently hitting all-time highs, Bitcoin has yet to keep pace, remaining below its historical peak. However, an overlooked catalyst in the marketthe ongoing yen depreciation trendmay be signaling a breakout for Bitcoin
Is Bitcoin About to Break Its All-Time High? The Overlooked Yen Depreciation Trend May Be the Key Catalyst
Despite gold and the S&P 500 recently hitting all-time highs, Bitcoin has yet to keep pace, remaining below its historical peak. However, an overlooked catalyst in the marketthe ongoing yen depreciation trendmay be signaling a breakout for Bitcoin.
A Bullish Signal for Risk Assets: Continued Yen Depreciation
The yen's recent persistent weakness, exhibiting a clear depreciation trend once again, is a positive signal for risk assets, including cryptocurrencies. This week, Bitcoin prices rose 8%, outperforming both gold and the S&P 500, despite not breaking its all-time high, while gold and the American benchmark stock index reached new highs.
Gold currently sits at $2,718, up 32% year-to-date, on track for its best annual performance since 2010. Meanwhile, the S&P 500 has gained about 23% in 2024. Bitcoin, despite seven months of volatility and decline, remains up over 50% year-to-date.
Why Has Bitcoin Not Made a New Record?
Bitcoin's sluggish performance since its all-time high of $73,700 in March can be attributed primarily to "running too fast, too far." At that time, the world's largest cryptocurrency's price had nearly quintupled from just 14 months prior, almost doubling in the first 10 weeks of 2024 alone.
Moreover, there was significant forced selling pressure during the summer. The German government began disposing of its large stockpile of seized Bitcoin, and MtGox trustees started distributing coins to holders, negatively affecting Bitcoin's price.
As a 24/7 traded asset, Bitcoin's leverage and volatility are far higher than other assets, leading to more liquidation cascades, pushing prices below fair value. The distribution during the summer period put downward pressure on Bitcoins price, but over time, signs of accumulation have emerged in the market.
Accumulation Trend and Positive Catalysts
According to Glassnode, so-called "shrimp" (those holding less than one Bitcoin) and "whales" (those holding between 1,000 to 10,000 coins) have been accumulating over the last month.
Looking ahead, a Bitcoin breakout above the all-time high seems inevitable. Expectations of further rate cuts by Western central banks, rising support for Republican presidential candidate Donald Trump, and increased inflows into spot Bitcoin exchange-traded products (ETPs) are all providing tailwinds for Bitcoins price.
However, the ongoing yen depreciation trend may be the biggest catalyst. Japans latest data showed headline inflation at 2.5% year-on-year, the lowest level since April and down 0.5% from last month. Core inflation also declined significantly. This means the Bank of Japan is unlikely to raise interest rates further.
Recall that in early August, a small rate hike by the Bank of Japan led to a surge in the yen, crashing global markets (including Bitcoin) within days. However, the yen reached a peak of around 140 against the dollar in mid-September before depreciating. Following Friday's inflation news, the yen weakened to 150 against the dollar, its lowest level since the panic in early August.
Japan has no inflation problem and no urgency to tighten, said Bob Elliott, chief investment officer at UnlimitedFunds. He noted that recent services inflation has fallen to near zero, and Japans GDP is negative for 2024.
Impact of Yen Depreciation on Bitcoin
The ongoing yen depreciation trend has a significant impact on Bitcoin prices. In the past five years, Bitcoin has risen over 1,000% against the yen, but significantly less against other currencies. Gold has shown a similar pattern, surging 150% against the yen, while gaining only 80% to 90% against other major currencies.
This means yen depreciation will indirectly push Bitcoin prices higher. As the yen continues to weaken, investors may seek assets with greater appreciation potential, with Bitcoin emerging as a prime candidate.
Conclusion:
The ongoing yen depreciation trend provides a crucial catalyst for Bitcoin to break its historical high. With the ongoing accumulation trend in the market and other positive factors driving prices, Bitcoin is poised to break its all-time high in the future. Investors should closely monitor yen exchange rate fluctuations and other macroeconomic factors correlated with Bitcoin price movements.
Disclaimer: The content of this article is sourced from the internet. The copyright of the text, images, and other materials belongs to the original author. The platform reprints the materials for the purpose of conveying more information. The content of the article is for reference and learning only, and should not be used for commercial purposes. If it infringes on your legitimate rights and interests, please contact us promptly and we will handle it as soon as possible! We respect copyright and are committed to protecting it. Thank you for sharing.(Email:[email protected])
