Yen Streak Overheating ... Bitcoin and Nasdaq Suggest Stability Possible

# Yen Strength Approaches Extremes, Potential Boost for Bitcoin and Nasdaq: Analysis By Jang Dosen, New York Correspondent A recent analysis suggests that the yen's bullish positions have peaked, potentially limiting further appreciation and laying the groundwork for a rebound in Bitcoin and the Nasdaq market. According to CoinDesk on the 11th (local time), the recent declines in the Nasdaq index and Bitcoin have coincided with surging Japanese government bond yields and the strength of the Japanese yen (JPY), a safe-haven asset. This market dynamic mirrors the events from early August last year. The low-yielding yen has supported global asset prices for decades. However, its recent strength may have provoked risk-averse sentiment in Wall Street and the cryptocurrency market. # Yen's Bullish Surge: A Signal for Nasdaq and Bitcoin Recovery? Data from the U.S. Commodity Futures Trading Commission (CFTC) shows that speculative forces took the largest long positions ever on the yen last week. This indicates a significant market conviction in yen strength, which could reverse if large-scale long liquidations (sales) occur, leading the yen to weaken. Morgan Stanley's G10 FX strategy team noted in a Friday client memo, "Given the extreme speculative positioning and strong bargain hunting demand from Japanese retail investors, chasing additional yen strength requires caution." Many Japanese investors tend to utilize the Nippon Individual Savings Account (NISA) system to purchase overseas assets during periods of risk aversion. This can slow the pace of yen appreciation. Additionally, Japan's public pension system often moves counter to market trends, rebalancing yen assets. A similar situation occurred last August when a sharp yen rise preceded a market downturn. Subsequently, the yen weakened, and the Nasdaq and Bitcoin rebounded. The USD/JPY exchange rate fell to 140 yen in July-August last year before rebounding to 158.50 yen by January this year. Bitcoin plunged to $50,000 in August but then surged, reaching an all-time high of $108,000 in January. # Short-Term Rebound? Mind the Volatility As of the article's writing, Bitcoin trades around $80,300, down roughly 5% in March. It also fell 17.6% in February and briefly dipped to $76,800 early Tuesday (local time). Meanwhile, the USD/JPY is trading at 147.23 yen, having earlier dropped to 145.53 yen, a five-month low. Experts suggest that the yen's overheated strength and institutional fund flows hint at solace for risk assets like the Nasdaq and Bitcoin. However, as U.S.-Japan bond yield differentials narrow, sustained yen strength remains a possibility. The yield gap between U.S. and Japanese 10-year government bonds currently stands at 2.68%, its lowest level since August 2022, suggesting a potential bullish reversal for the yen.