 ▲ Takahashi Trade: What Crypto Pressure Factors Are Hiding Behind the Rebound / AI-Generated Image |
The so-called “Takahashi Trade,” sparked after Japan’s general election, may weigh on the cryptocurrency market by tightening global liquidity despite its short-term rally, according to warnings.
After Prime Minister Sanae Takahashi secured strong political legitimacy in the snap election, Japanese equities surged, with the Nikkei 225 breaking past 57,000. As the yen weakened further, Bitcoin (BTC) briefly climbed above $72,000 during Asian trading hours.
While the market reaction appeared to signal a renewed appetite for risk assets on the surface, analysts say a different dynamic is unfolding beneath. The policy mix of aggressive fiscal expansion, tolerance for a weak yen, and accommodative monetary conditions—dubbed the “Takahashi Trade”—is seen as reshaping cross-border capital flows. Japanese exporters and the domestic equity market have benefited, but the broader global risk-asset complex could face headwinds.
XWIN Research Japan, a contributor to CryptoQuant, noted that the key risk is not a sudden capital flight from the United States. Instead, as Japanese government bonds regain appeal after emerging from an ultra-low-rate environment, global investors are rebalancing portfolios. Expanding fiscal spending and reflation expectations have pushed bond yields higher, drawing capital back into Japanese assets and putting adjustment pressure on U.S. equities. Recently, the Nasdaq and the S&P 500 entered corrective phases, while inflows into U.S. equity ETFs also slowed.
Currency conditions are adding to the strain. Yen weakness, the U.S.–Japan rate differential, and rising dollar demand have increased funding costs for leveraged trades, a combination that has historically triggered simultaneous de-risking across asset classes. Bitcoin’s recent pullback aligns with this context. Although it recovered the $70,000 level after the election, rising correlations with U.S. equities during risk-off phases have led to portfolio-level reductions.
CryptoQuant data suggest the downturn has been driven more by a decline in futures open interest and deleveraging than by deteriorating on-chain metrics. After forced liquidations cleared excessive long positions earlier this month, traders have grown cautious about chasing rebounds. Over the medium to long term, Prime Minister Takahashi’s political stability could support tax reforms, stablecoin regulation, and Web3 policy initiatives. In the short term, however, a shift in Japan’s fiscal stance combined with pressure on U.S. equities may keep downside risks elevated for the crypto market.
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