QCP: US-Japan Joint Intervention in Forex Market Affects Crypto Market Liquidity

On August 3, QCP Capital stated that the United States and Japan jointly intervened in the forex market last Friday, a rare occurrence. The New York Federal Reserve, representing the U.S. Treasury, purchased yen, marking the first joint forex intervention by the U.S. and Japan since 2011, and the first coordinated action specifically to support the yen since 1998. This move has refocused the market on long-term U.S. Treasury yields, with the 30-year Treasury yield briefly rising to around 5.27%, the highest level since 2007, while the 10-year breakeven inflation rate remained at approximately 2.28%. Market attention has expanded to U.S. Treasury issuance, investor demand, and cross-border capital flows. For the crypto market, the rapid appreciation of the yen may trigger the unwinding of yen financing trades, impacting risk assets such as BTC and ETH; however, if the yen exchange rate stabilizes, it could help reduce the need for further interventions and alleviate liquidity pressures in the U.S. Treasury market. This intervention does not provide a clear directional signal for crypto assets but highlights that the USD/JPY exchange rate, Japan's financing environment, and long-term U.S. Treasury yields are becoming important factors influencing the liquidity environment for BTC and ETH.

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