Crypto▼ Bearish
Yen Intervention Unwinds Carry Trades, Hits Crypto Leverage
US-Japan yen intervention unwinds $5B-$10B in carry trades, hitting crypto leverage. Bitcoin open interest fell 4% as stronger yen forces position unwinding.
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The US Treasury bought Japanese yen on August 1 for the first coordinated US-Japan currency intervention in roughly 30 years. Washington sold euros to finance the purchase, reviving a tactic last used in the 1990s. The yen had fallen to its weakest against the dollar since 1986. President Donald Trump called the move a "signal of friendship" to Japan.
Treasury Secretary Scott Bessent's note estimated the yen purchases at $5 billion to $10 billion. The final amount was not disclosed, standard practice for such operations. The Federal Reserve Bank of New York executed the trades.
Japan had already been selling US Treasuries to finance its own yen-support operations. That dynamic was pushing up American borrowing costs, Treasury data showed. The intervention reduces Japan's need to dump Treasuries, which could cap the recent spike in yields.