Bitcoin’s price faced downward pressure today, declining 1% as investment banking giant Goldman Sachs recommended the Japanese yen over BTC as the preferred hedge against growing recession and tariff risks. This development comes amid heightened market uncertainty surrounding Trump’s upcoming ‘Liberation Day’ tariff policies and their potential impact on global markets.
Market Impact and Goldman’s Analysis
The BTC/JPY trading pair on Japanese exchange bitFlyer encountered resistance at a key trendline, failing to break above the record high established on January 20. The USD-denominated Bitcoin price showed similar weakness, with global markets remaining cautious ahead of potential trade policy shifts.
Expert Insights on Safe Haven Assets
Kamakshya Trivedi, Goldman’s head of global foreign exchange strategy, emphasized the yen’s historical strength as a hedge against U.S. economic uncertainties. The bank specifically highlighted the currency’s effectiveness during periods of labor market weakness and declining real rates.
Bitcoin’s Store of Value Narrative Challenged
While Bitcoin proponents have long positioned the cryptocurrency as digital gold, its correlation with tech stocks presents challenges to this narrative. Recent market data shows significant outflows from Bitcoin ETFs as investors reassess their risk exposure amid growing economic concerns.
Technical Analysis and Price Levels
The USD/JPY pair currently trades at 149.77, with Goldman projecting a move to the low 140s this year. This currency dynamic could impact Bitcoin’s price action, particularly given the historical relationship between yen carry trades and crypto market performance.
FAQ Section
Why is the yen considered a safe-haven asset?
The yen traditionally strengthens during periods of global economic uncertainty due to Japan’s status as a major creditor nation and its stable financial system.
How does Bitcoin compare to the yen as a hedge?
While Bitcoin offers potential hedging benefits, its higher correlation with risk assets like tech stocks makes it less reliable than the yen during economic downturns.
What impact could Trump’s tariffs have on Bitcoin?
Tariff-induced market volatility could lead to increased risk-off sentiment, potentially affecting Bitcoin’s price due to its correlation with traditional risk assets.