XRP Outperforms Crypto Majors as Japan Yen Strength Signals Bitcoin Trouble

XRP rose over 5% in the past 24 hours to drive gains among majors in the past 24 hours as a Thanksgiving holiday saw bitcoin BTC$91,725.39 avoid a feared historical “massacre,” with a slight uptick across the market.

BTC was changing hands above $96,000 in the early hours Friday, a steady rise from Thursday’s lows of $93,500. Ether ETH$3,132.49, Solana’s SOL, and BNB were little changed, while Cardano’s ADA was 3.5% higher, and DOGE$0.1426 lost 1.2%.

The broad-based CoinDesk 20 (CD20), a liquid fund tracking major tokens, added 1.3%. Algorand’s ALGO and Worldcoin’s WLD jumped as much as 21% to lead gains among midcaps amidst no immediate catalysts.

The crypto market’s moves in Asian hours came as the Japanese yen broke a key level against U.S. dollars.

The yen briefly crossed 150 against the dollar due to expectations of a Bank of Japan (BOJ) rate increase in December, spurred by higher-than-expected Tokyo inflation data. The movement was likely accentuated by month-end financial adjustments and low liquidity due to Thanksgiving.

Market sentiment leans towards a 63% chance of a BOJ rate hike, contrasting with a 67% likelihood of a Fed rate cut, which could reduce the attractiveness of yen carry trades. Yen is colloquially known as an "anti-risk" currency and is seen as a safe-haven currency that investors turn to during times of stress.

Yen's outperformance at the end of July and September has previously catalyzed the unwinding of carry trades, or bullish risk-on bets, financed by relatively cheap yen-denominated loans as it became more expensive to borrow the Japanese currency.

A CoinDesk analysis earlier this week signaled bitcoin's bullish run has weakened, with the Aussie dollar/Yen exchange rate dropping, signaling a risk-off mood. The AUD, linked to global economic health, and the yen tend to affect risk assets like BTC inversely.

This scenario echoes an earlier period when a yen surge due to BOJ rate hike rumors led to an 8% drop in AUD/JPY and a $20,000 fall in BTC, showing the potential impact of FX movements on cryptocurrencies.