Bitcoin, Nasdaq Plunge with Yen’s Rise; Overstretched Yen Could Signal Reversal

• Nasdaq and BTC crashed amid increase in Japanese government bond yields. 
• A similar pattern was seen last year when the USD/JPY pair rebounded following its decline to 140.
• Nasdaq and Bitcoin could regain strength if money is rotated from JPY to risk assets.

Nasdaq and Bitcoin (BTC) both got hammered in recent weeks, just as Japanese government bond yields climbed and the Japanese yen (JPY), often seen as a safe haven, gained strength. 

This market action looks a lot like what happened in early August, raising the question of whether we’ll see a similar outcome. Historically, the low-yielding yen has been a source of support for global asset prices, so its recent jump could be behind the latest wave of risk aversion hitting both crypto and stock markets.

Yen Rally Looks “Too Far, Too Fast”

However, this bullish run for the Japanese yen might be overdone. Data from the Commodity Futures Trading Commission (CFTTC), tracked by MacroMicro, shows that bets for the yen (speculative long positions) hit a record high last week.

Often, when everyone piles on one side of a trade, it sets up a reversal. Traders start closing out those crowded positions, and t…

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