Crypto markets followed a calm course in the shadow of uncertainty on the last trading day of the week. New economic data from Japan, together with the war in Iran, created a cautious atmosphere in the markets. While the leading cryptocurrency Bitcoin is having difficulty rising above the $ 78,700 level it reached on Thursday, it was noted that the upward trend seen in the market since the end of March has lost momentum since the beginning of this week.
Japan inflation exceeded expectations, reflected in the crypto market
As one of the largest economies in the world, Japan is a country closely followed by cryptocurrency investors. In March, Japan’s Service Sector Wage Index rose 3.1 percent, above forecasts; This rate indicates that price pressures in the service sector continue. In addition, core inflation in the country moved upwards for the first time in the last five months, reaching 1.8 percent in March. Headline inflation rose to 1.5 percent, but remained below the Bank of Japan’s (BOJ) 2 percent target. On the other hand, in the ‘core-core’ indicator, which excludes fresh food and energy, inflation decreased to 2.4 percent, reaching the lowest level since October 2024.
With these data, the fluctuation of the yen in global markets and the risk appetite for Japanese assets put a noticeable pressure on crypto prices. Investors point out that the rise in energy prices, as well as inflation in Japan, may create additional pressure on the market.
Geopolitical risks affect pricing
The ongoing tensions in Iran continue to pressure the markets, especially with the disruptions in oil transportation passing through the Strait of Hormuz. Iran deployed additional naval mines in the strait throughout the week, significantly reducing commercial traffic in the region through which nearly 20 percent of the world’s seaborne oil passes, Axios reported. The US Department of Defense has warned Congress that clearing mines in the region could take at least six months after the war ends.
While the rapid rise in oil prices attracted attention, the WTI contract gained more than 40 percent in value since the end of February, reaching up to 96 dollars. This situation directly affects the inflation dynamics of high oil importing countries such as Japan. Rising energy costs could lead to resilience in inflation both in Japan and globally.
The market’s eyes are on the Bank of Japan meeting
All eyes are now on the Bank of Japan’s next critical meeting. According to analysts at InvestingLive, the Bank may leave interest rates unchanged at this meeting, but may give clearer warnings about interest rate increases in the near term. In particular, an interest rate step is expected to come in June due to increasing war-related inflation risks.
According to analysts’ assessment, if the Bank toughens its rhetoric and issues a warning indicating an interest rate increase in the near future, the Japanese yen may gain value rapidly, which may lead to strong fluctuations in global markets.
According to the latest data released by the CFTC, the Japanese yen is currently held speculatively mostly by dealers. If a possible interest rate increase or a hawkish message arrives, it may witness a new, sudden and strong buying wave in the short term.
Historically, the Japanese yen has been used as a funding currency for risky asset purchases, so a sudden upward move could lead to increased risk sentiment and even lead to selling pressure in many market instruments other than crypto.
While Bitcoin spent the week flat and cautious around $77,800, Ethereum experienced a similar limited decline of 0.8 percent at $2,300, while Bitcoin’s daily loss remained more limited at 0.6 percent.
