The Japan carry trade unwinding, which is one of the key reasons $BTC is dumping right now.
Don't get it? No worries, I’ll explain it simply for you:
Japan has long been the world's cheapest funding source, thanks to ultra-low interest rates.
Investors borrow yen cheaply, then reinvest it into higher-yield assets abroad.
This is what's called a carry trade.
But for the past 8 years, Japanese bond yields have been climbing, and just hit a 2-decade high.
Why's that a problem?
Higher yields = higher borrowing costs = fewer carry trades = less global liquidity.
What's worse, as yields rise, investors start to unwind positions, selling risk assets like crypto, before borrowing gets too expensive.
And that is why, BTC is struggling right now, as it is a very liquidity-sensitive asset.
BTC
76,882
-2.27%