According to Dante Cook, head of business at Swan Bitcoin, Japan’s significant holdings of U.S. Treasurys could spell disaster for both countries if the yen continues to decline.
According to Google Finance, one Japanese yen is currently worth about $0.0064. This indicates a value decline of 2.39% over the last 30 days.
Cook explained in the May 8 episode of Swan’s Bitcoin Daily that Japan holds only 4% of its forex reserves in gold; the rest is primarily in U.S. Treasurys. He noted that without intervention from the U.S. government in the form of swap lines or backdoor liquidity, Japan may be compelled to sell its U.S. Treasurys to support its currency.
Cook argued that this potential sell-off could introduce uncertainty into traditional securities markets and create a massive influx of liquidity, which could benefit Bitcoin as investors seek safer alternatives.
Cook noted that Bitcoin has already seen a wave of liquidity from institutional investors since the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs trading in January 2024. According to data from Farside Investors, these ETFs have amassed total net inflows of $11.78 billion since their launch.
However, Bitcoin is currently trading at $61,399, up 6.29% over the past week, according to CoinMarketCap data.
In the midst of this financial uncertainty, Cook predicts that more people will turn to riskier crypto altcoins as traditional markets falter. He pointed to VanEck, a spot Bitcoin ETF issuer, which recently announced its MarketVector Meme Coin Index even though it is not performing exceptionally well in the ETF market.
“It’s kind of shocking that an institution would offer this to retail clients, but I guess it’s not at the same time,“
Cook remarked, highlighting the prevailing uncertainty in traditional financial markets.
Disclaimer: This piece is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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