Will There Be Another CRASH?? Yen Carry Trade Explained!
Published: 2024-08-21
Status:
Available
|
Analyzed
Published: 2024-08-21
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
Bitcoin experienced a 30% price crash between July 29th and August 5th.
"BTC crashed 30% from the 29th of July to the 5th of August"
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Bitcoin recovered by 28% in the three days following the crash.
"BTC recovered by 28% over the next 3 days"
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Bitcoin possesses sufficient liquidity for large institutional movements, operating 24/7/365.
"it's also the only asset with deep enough liquidity for institutions to move in and out of large positions on mass 247365"
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Bitcoin's volatility is decreasing over the long term, which is expected to lead to slower returns.
"volatility is in a long-term downtrend and this means that returns will eventually slow down too"
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The debasement of fiat currency through quantitative easing is the primary driver, leading to Bitcoin's eventual success.
"fiat currency debasement by quantitative easing is the biggest Story by far and this is why Bitcoin will eventually win"
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The Yen carry trade is estimated by some analysts to be as large as $20 trillion, representing 55% of Japan's GDP.
"the Yen carry trade could amount to 20 trillion or 55% of Japan's GDP"
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An alternative estimate, based on BIS data regarding Japanese banks' foreign lending, suggests the Yen carry trade is closer to $1 trillion.
"another estimate based on the bank for international settlements' data on Japanese Banks foreign lending places the number closer to 1 trillion dollar"
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Japan's Ministry of Finance and Bank of Japan intervened in September and October 2022 by selling $60 billion in US Treasuries to buy Yen.
"in September and October of 2022 came the first of several Yen interventions The Ministry of Finance and boj sold $60 billion of Japan's reserves of us treasuries for dollars and used the proceeds to buy yen on the open market"
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Following the 2022 Yen interventions, the Yen appreciated by 16% against the US dollar.
"the Yen bounced back 16% against the dollar"
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In April-May 2024, Japan conducted another Yen intervention, selling $62 billion in US Treasuries to purchase Yen.
"The next Yen intervention came in April May 2024 when Japan sold $62 billion of us treasuries to buy yet more Yen"
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The Yen saw a 5% gain against the dollar for one week following the April-May 2024 intervention.
"the Yen rallied for one whole week gaining 5%"
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UBS had predicted a Bank of Japan rate hike in April 2024.
"UBS for example predicted that the boj would raise rates in April of 2024"
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The Bank of Japan raised its policy rate in March 2024.
"the bank voted in March 2024 to raise its policy rate"
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The March 2024 Bank of Japan rate hike moved the policy rate from -0.1% to a range of 0% to 0.1%.
"the raise merely bought the boj's policy rate from minus 0.1% to a range between 0 and positive 0.1%"
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BoJ Governor Kazuo Ueda stated that the March 2024 decision would result in only a 0.1% increase in short-term interest rates.
"Governor kazuo Eda had to say at the time quote today's decision will only lead to a 0.1% increase in short-term interest rates"
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Borrowing Yen at rates between 0% and 0.1% is considered effectively free money, enabling continued Yen carry trades.
"borrowing the Yen at between 0 and 0.1% is still basically free money"
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The JPY/USD pair reached a 38-year low, nearing 62 Yen to the dollar, in early July of the current year.
"JPY USD sinking to a 38-year low of almost 62 Yen to the dollar"
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The Bank of Japan increased its rates from the 0-0.1% range to 0.25% in July.
"rates were to increase from the 0 to 0.1% range up to 0.25%"
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Governor Ueda indicated that the Bank of Japan would continue to raise rates if economic and inflation data followed the current trend.
"Governor ueda said that rates would keep Rising as long as economic and inflation data continued on the same trajectory"
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Japan's Topix and Nikkei 225 stock indexes experienced a 12% plunge.
"Japan's topics and nick a225 stock indexes plunged 12%"
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Net short positions in Yen contracts, as tracked by the CFTC, were halved between early July and early August, and were nearly fully unwound by August 6th.
"net short positions in Yen contracts tracked by the US commodity Futures Trading commission had halved by the 6th of August they had almost completely unwounded"
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The current Bank of Japan policy rate remains at 0.25%.
"the B rate is still just 0.25%"
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The Yen carry trade is expected to end soon.
"the days are numbered for the Yen carry trade"
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Foreign lending in Yen by Japanese banks has been increasing since 2010 and saw acceleration in 2022.
"Japanese Banks's foreign lending in Yen has been on the rise since 2010 and accelerated in 2022"
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Japanese banks' foreign lending reached $1 trillion by March 2024.
"it reached a trillion dollars by March of 2024"
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Japan holds the world's largest net international investment position, valued at $3.4 trillion.
"Japan having the biggest net International Investment position in the world you know the 3.4 trillion one"
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The Bank of Japan is unlikely to significantly increase interest rates, proceeding at a very slow pace.
"it seems highly unlikely that they'll hike rates at anything more than a glacial Pace from here"
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Half of Japan's $1.6 trillion State Pension Fund is invested in foreign stocks and bonds.
"half of Japan's $1.6 trillion State Pension Fund is allocated to foreign stocks and bonds"
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