SUMMARY

• The U.S. dollar’s strength against the yen is contributing to favorable market conditions for bitcoin, according to an analyst.
• Since the Federal Reserve’s 50 basis-point rate cut on Wednesday, bitcoin’s price has risen by over 6%.

Bitcoin’s price has surged by over 6% since the U.S. Federal Reserve declared a 50 basis-point cut to its Federal Funds rate earlier this week, reaching a peak of $63,800 amid early Friday trading. This rally takes after a brief dip to around $57,500 at the start of the week. Analysts attribute the rise not only to the Fed’s rate cut but also to the weakening Japanese yen. According to derivatives trader Gordon Grant, the U.S. dollar has reinforced against the yen since Monday, which has bolstered bitcoin’s upward momentum. Historically, a more grounded dollar relative to the yen benefits higher-risk assets, as the yen is regularly utilized in “risk-on” trades where investors borrow in low-interest currencies to seek higher returns.

Grant highlighted that the yen’s shortcoming against the dollar is playing a key part in the market, boosting assets like gold, silver, and bitcoin. He also noted that bitcoin can act as a “short dollar proxy,” picking up when the dollar weakens, but also behaves like a high-beta resource, rising when market risk opinion improves. On Friday, the Bank of Japan chose to maintain its interest rate at 0.25%, strengthening the macroeconomic environment of a strengthening dollar and a weakening yen. Whereas the BoJ had already indicated plans to raise rates in July if inflation followed its anticipated path, it eventually opted to hold steady, despite expectations of higher Consumer Price Index inflation by 2025.

Bitcoin’s one-week gains have presently expanded to 10%, amid decisions by central banks such as the Federal Reserve, Bank of England, and the BoJ, which has affected markets globally. Traders noted that macroeconomic information points to optimism for riskier assets like bitcoin in the months ahead. Concurring to QCP Capital, the recent steepening of the US 2Y/10Y treasury spread reflects market good faith, signaling a shift toward risk-on assets. Open interest data from CoinGlass indicated a roughly $5 billion jump in bitcoin bets since Tuesday, showing that new money is entering the market with the desire of increased volatility.

Additionally, the crypto markets saw critical jumps in the past 24 hours, with meme coins and layer-1 tokens driving the gains. Solana (SOL) and Ether (ETH) rose as much as 7%, whereas Avalanche (AVAX), Aptos (Apt), and Immutable (IMX) surged up to 12%. Memecoins, especially bonk (BONK), saw gains of up to 10%, signaling a return of risk-on behavior across the market. Bitcoin’s price developments, alongside broader market action, propose that traders stay optimistic about the potential for further gains in the near term.