Bitcoin (BTC) slipped on Monday as investors looked past AI-driven optimism and focused instead on a growing threat to risk assets reducing global liquidity. While concerns over a potential Coldcard wallet exploit and Friday's spot Bitcoin exchange-traded fund (ETF) outflows weighed on sentiment, Bitunix analysts argued that the threat is not driven by those factors but by other macro factors at play.
The analyst has warned that rising bond yields, concerns about the credibility of the Fed, and a possible unwinding of yen carry trades pose a much bigger risk to Bitcoin’s rally in the coming months.
Chen pointed to strong performances from Microsoft (MSFT), Google (GOOG), and Amazon (AMZN) that helped spur a rebound in semiconductor stocks, while South Korea’s semiconductor exports soared almost 180% on-year and the KOSPI saw its best single-day gain on record. The market is not questioning the long-term growth story around AI, Chen said, adding that investors are more concerned about “whether AI investments can generate sustainable revenue growth.”
Confidence in the Federal Reserve's inflation-fighting credibility is coming under pressure, and investors are demanding a higher risk premium, the analyst said. He cited multi-year highs in long-dated U.S. Treasury yields and said higher discount rates may put pressure on valuations in both technology stocks and cryptocurrencies, as inflation rises, even as the Fed has decided to keep rates unchanged. “Although the Fed kept rates unchanged, three officials publicly supported a rate hike,” said Chen.
The analyst said that Japan and the U.S. might be working together to support the yen, which could speed up the end of yen carry trades and reduce one of the biggest sources of global liquidity. Historically, Japan has been one of the biggest sources of carry-trade money.
The yen carry trade is an investment plan where investors borrow Japanese yen at low interest rates and invest in higher-yielding assets such as US stocks, bonds or cryptocurrencies. Investor unwinding of these trades can lead to selling across global risk assets, often when the yen strengthens or Japanese interest rates rise.
If policymakers continue to intervene to curb the yen's decline, investors might start to unwind yen-funded positions, which could lead to tighter global liquidity conditions, the analyst said.
On Stocktwits, one user said that the US Treasury and Japan’s treasury could further weaken the dollar. Historically, if the dollar weakens, it has been bullish for Bitcoin.
Bitcoin's price was trading down by 0.7% during the past 24 hours. On Stocktwits, retail sentiment around BTC remained in the 'bearish' zone over the past day. However,iIn the past seven days, chatter around the apex cryptocurrency rose over 52% on the platform.
Investors will be closely watching this week's ISM manufacturing and services surveys, JOLTS job openings, ADP employment report, nonfarm payrolls data and earnings from companies including (PLTR), AMD (AMD), and SpaceX (SPCX) for clues about the strength of AI investment and the broader economy, said Bitunix analyst Dean Chen.
However, Bitcoin’s fate is dependent on the geopolitical climate as much as the Federal Reserve and Bank of Japan’s rate decisions. While there has been some progress in negotiations between the United States and Iran, no lasting agreement has come to fruition on the Strait of Hormuz, Chen said. On Sunday, President Donald Trump canceled the strikes on Iran, adding that the U.S. is “holding” what would have been a “massive attack,” but that it could still happen “anytime we want.”
Within Iran and Israel, meanwhile, there is no movement off their positions, and no resolution has been reached that could impact the energy supplies, wrote Chen. As long as there is uncertainty over global energy transportation, the Fed is likely to remain sensitive to risks of inflation, he added, especially if higher energy costs begin to feed through to broader consumer prices.
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