Bitcoin extended its recent losses on Tuesday, falling 0.8% to trade below $88,000, while ether dropped a sharper 1.6% to just under $2,900. The broader CoinDesk 20 index retreated 1.54%, reflecting a wider pullback in risk assets amid a strengthening Japanese yen and renewed caution in global markets.
The yen surged more than 1.4% against the dollar after Japanese Prime Minister Sanae Takaichi signalled decisive action to curb speculative currency movements. Although no specific measures were detailed, the statement came as Japan’s 10-year government bond yields briefly hit a 27-year high before easing slightly. Traders interpreted the remarks as a potential precursor to intervention, prompting a rapid unwind of the long-standing yen carry trade.
A recent “rate check” by the Federal Reserve Bank of New York further fuelled speculation of coordinated policy efforts between Tokyo and Washington. Investor Michael Burry, known for his prescient short of the subprime mortgage market, highlighted the narrowing gap between Japanese and global bond yields, warning of “repatriation pending” a possible return of up to $5 trillion in Japanese overseas investments, much of it from U.S. assets.
The risk-off move weighed heavily on equities, with the Nikkei 225 falling 1.8%, while Nasdaq and S&P 500 futures also declined. Capital exiting riskier positions has largely bypassed bitcoin, instead flowing into gold, which hit a historic milestone by surpassing $5,000 per ounce for the first time and climbing further to around $5,090.
Greg Cipolaro, global head of research at NYDIG, argued that bitcoin’s “always-on, deeply liquid” nature is working against it during periods of market stress. “In times of uncertainty, investors seek maximum liquidity and proven safe-haven status,” he noted. “Gold benefits disproportionately in these environments.”
CryptoQuant data added to the bearish tone, showing long-term bitcoin holders selling at a loss for the first time since October 2023 a potential signal of capitulation among committed investors.
Attention now turns to this week’s Federal Reserve meeting, where rates are widely expected to remain unchanged. However, market participants will closely parse Chair Jerome Powell’s comments for any hints about the path of policy easing in 2026.
Adding to broader uncertainty, betting platforms Polymarket and Kalshi currently price the probability of a U.S. government shutdown at around 78–79%, further dampening appetite for risk assets.
While bitcoin has struggled to attract safe-haven flows in the current environment, analysts caution that sharp reversals remain possible if geopolitical or policy risks subside or if the Fed signals a more dovish stance than anticipated. For now, the cryptocurrency is under pressure as traditional safe havens and a resurgent yen dominate the narrative.
