Bitcoin's 52-week correlation with USD/JPY hits -0.90, undercutting 'carry trade' theory
Key takeaways
- The direction of that relationship undercuts the popular "carry trade" theory that suggests yen strength could trigger risk aversion in the crypto market.
- The 52-week rolling correlation coefficient between Coinbase's BTC/USD pair and the USD/JPY pair from the currency markets now stands at -0.90, according to data source TradingView.
- A coefficient of -0.90 indicates a strong negative correlation: BTC/USD tends to fall when USD/JPY rises, and vice versa.
The direction of that relationship undercuts the popular "carry trade" theory that suggests yen strength could trigger risk aversion in the crypto market.
The 52-week rolling correlation coefficient between Coinbase's BTC/USD pair and the USD/JPY pair from the currency markets now stands at -0.90, according to data source TradingView. That's the most negative reading since late 2022. Squaring that figure gives an R2 of about 0.81, meaning roughly 81% of the weekly variation in BTC/USD can be statistically explained by movements in USD/JPY.
A coefficient of -0.90 indicates a strong negative correlation: BTC/USD tends to fall when USD/JPY rises, and vice versa. Since USD/JPY rising reflects yen weakness, that means BTC and the Japanese yen have tended to move in lockstep against the dollar, both strengthening together, or both weakening together.