Analysis: The strengthening of the yen may lead to a negative feedback loop for global risk assets. Encryption traders need to remain cautious.

Odaily Planet Daily News The Japanese yen has pumped 2.4% against the US dollar since last Thursday, reaching 145 yen to 1 US dollar, showing a preference for safe-haven currencies. Similar yen strength in early August triggered the release of arbitrage trades, leading to significant fluctuations in risk assets including BTC. The price of BTC fell from about $70,000 to $50,000 in the eight days before August 5, and then rebounded to $60,000 against the US dollar. Notable traders Simon Ree and Andrei Kazantsev, encryption trading director at Goldman Sachs, both pointed out that the strength of the yen may lead to a negative feedback loop for global risk assets. According to ING's analysis, the yen's rebound may change market behavior, increasing the willingness to buy when the yen weakens, thus increasing the risk of yen strength. In the coming weeks, as the Federal Reserve's Interest Rate decision meeting in mid-September approaches, Arbitrage trading relief may continue. Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions, said that if the Fed cuts interest rates by 50 basis points, the market may first rise and then fall, as concerns about the economy and the strength of the yen will reignite Arbitrage trading relief. (Coindesk)