- Bitcoin rallied above $81,000 during US trading, gaining over 5% in 24 hours.
- The USD/JPY pair dropped to 155.4 amid suspected Bank of Japan intervention, dragging the US Dollar Index down to 99.
- Polymarket odds for a BOJ rate hold collapsed from 12% to 1%, with a 98% probability now priced in for a 25-basis-point hike on Sept. 18.
Bitcoin rallied 5% to $81,000 during US trading hours on Wednesday, reaching near the highs seen during last month’s surprise upside. The move came as the Japanese yen continued to strengthen in a suspected central bank intervention, which was first reported on Wednesday.
After dropping to 158.5, the USD/JPY pair saw further downside to 155.4, putting pressure on the US dollar index, which fell to 99. Downside in the DXY has historically been positive for Bitcoin.
Shares of Michael Saylor’s Strategy participated in the rally and rose 8.6% on Wednesday. The stock is up 70% from its lows in late June but still down roughly 10% year-to-date.
The latest suspected intervention to support the yen, coupled with the prospect of a Bank of Japan rate hike, has revived fears of another carry-trade unwind. The Macro Paper commented: “In the last 24 hours, USD/JPY has dropped almost 2.5%, which doesn’t happen without any major intervention.”
Consequently, Polymarket probabilities for a BOJ rate hold dropped from 12% to 1% Wednesday. The current market-implied probability of a 25-basis-point rise by the BOJ on Sept. 18 is now 98%.
Some analysts view the currency intervention as liquidity-positive. Arthur Hayes, CIO of Maelstrom, has long held that the FIMA repo facility will provide Japan with dollar liquidity against Treasury collateral.
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