Bitcoin has achieved a new milestone, setting a record in Yen valuation early on Thursday, surpassing its value in U.S. dollars, euros, British pounds, and Australian dollars. This surge comes amid ongoing monetary expansion by the Bank of Japan and rising inflation, which have collectively dampened the appeal of the Japanese yen.
Unlike traditional fiat currencies such as the U.S. dollar, euro, and yen, which lack tangible backing and derive their value from market perceptions, Bitcoin’s recent ascent highlights a growing preference for the cryptocurrency, especially in the context of the yen’s diminishing strength among major fiat currencies.
Highlighting this trend, Bitcoin reached an unprecedented 7.9 million yen on Tokyo’s bitFLYER exchange early Monday. This contrasts with its dollar value, which, although over $52,000, remains 32% below its all-time high of $69,000 recorded in November 2021, as per TradingView data.
This disparity underscores the yen’s relative vulnerability, exacerbated by the Bank of Japan’s persistent monetary easing and inflation resurgence. While central banks globally, including the Federal Reserve, have been hiking interest rates to counter inflation, the Bank of Japan has maintained its rates at zero, continuing its extensive money supply expansion.
Japan witnessed a significant 3.1% rise in core inflation in 2023, the highest since 1982, excluding the more volatile food and energy sectors. Such inflation diminishes fiat currency value, prompting investors to seek refuge in assets like Bitcoin and gold, known for their value preservation qualities.
The yen’s value has fallen by 13% and 7.5% against the dollar and experienced a further 6.4% decline this year. Bitcoin’s premium in yen is likely to persist unless the Bank of Japan shifts towards a quicker withdrawal from its lenient monetary stance, which could enhance the yen’s attractiveness compared to other assets.
The legal clarity around digital asset trading in Japan, Hong Kong, and Singapore, superior to that in many other developed markets, combined with ongoing fiat currency fluctuations, may further encourage the growth of cryptocurrencies and other alternative assets in these regions for Global Crypto.
