A quiet but powerful shift is happening in global markets, and it could help explain why Bitcoin and other cryptocurrencies are feeling shaky lately. According to financial commentator Graham Stephan, the reason goes back to something called the yen carry trade.
For decades, this trade has been one of the main engines pumping money into global markets.
Here’s how it worked, in simple terms.
Investors borrowed money in Japan, where interest rates were close to zero. Then they took that cheap money and invested it in higher-paying assets overseas, mainly U.S. Treasuries earning around 4% to 5%. They didn’t even need to use their own cash. As long as rates stayed low in Japan and the yen stayed stable, it was easy money.
Graham Stephan called the yen carry trade the “secret engine” behind global liquidity. And for a long time, it worked.
But now, that engine is slowing down.
Japan has started raising interest rates to protect its currency. At the same time, the U.S. Federal Reserve has begun cutting rates. That squeezes the profit gap that made the trade so attractive in the first place.
As Stephan explains it, when Japanese rates rise, the trade flips. Investors suddenly need to unwind their positions. That means selling U.S. assets and sending money back to Japan to pay off yen loans.
In other words, money is being pulled out of markets.
That creates a liquidity drain — and when liquidity dries up, risk assets usually feel it first.
Bitcoin falls into that category.
Bitcoin often reacts quickly when leverage starts unwinding. When investors are forced to sell, prices can swing fast and hard. Less liquidity means bigger moves, both up and down. That’s why Bitcoin tends to get more volatile during these kinds of market events.
Stephan points out that this kind of forced selling doesn’t mean Bitcoin is “broken.” It just means it’s sensitive to changes in global money flows.
At the same time, there’s another force moving in the opposite direction.
The Federal Reserve has already cut interest rates three times this year. It has also ended its tightening program and announced plans to buy U.S. Treasuries over a short period. That signals a shift toward easier monetary policy.
Long term, that kind of environment has usually been supportive for assets like Bitcoin.
So Bitcoin is stuck in the middle.
On one side, there’s short-term pressure from investors unwinding the yen carry trade and pulling cash out of markets. On the other side, there’s potential long-term support from the Fed turning more friendly toward liquidity.
Stephan also mentioned an interesting historical pattern. In past market cycles, Bitcoin has seen drops of more than 50%. But it has rarely fallen below the cost required to mine it — basically the electricity and resources needed to produce one Bitcoin. Historically, that level has often marked strong long-term buying zones.
Right now, Bitcoin prices have been moving sharply as markets react to stress across stocks, bonds, and currencies. Because Bitcoin is closely tied to liquidity and investor risk appetite, it tends to swing faster than most assets when things get unstable.
Analysts estimate that the yen carry trade involves trillions of dollars. So when it starts to unwind, the impact doesn’t stay small. It ripples through stocks, bonds, crypto, and beyond.
In short, what’s happening with Bitcoin may have less to do with crypto news — and more to do with a massive global trade quietly being reversed.
