Has The First Domino Has Moved?

I’ve been searching for the reason why crypto and specifically XRP price is crashing. Initially I thought it was Wall Street market manipulation ensuring the XRP price is low just as they need it to back their ETF products. But the price kept on going down and not just XRP.

Then I saw several post explaining what’s happening in Japan. Seems like the bond market has blown up with 10Y JGB yields spiking hard. So it looks like the Japanese reverse carry trade has started to unwind.

Here’s a reminder of what the reverse carry trade is and what it means in the simplest terms possible:

Big investors borrow money in yen because Japan’s interest rates are low - in some cases zero or negative.

They then convert that yen to dollars and invest in things like U.S. stocks, bonds, crypto anything that gives higher returns. Nice easy money.

It is estimated that tens of trillions has been borrowed for this trade.

As long as the yen stays weak and stable, this trade works great.

However, yesterday, Japanese bond yields spiked. That made borrowing in yen suddenly more expensive and risky. So those same investors had to reverse the whole trade quickly.

Which means they sell their U.S. assets and convert dollars back to yen to pay back the loans.

All that selling creates pressure on the market, which is why we saw risk on assets like crypto and stocks correct.

In one sentence: People who borrowed cheap yen had to sell what they bought and that selling hit the whole market today.

Strap in as things could get rocky from here.

Watch Jake Claver’s Domino Theory to find out why and how XRP was designed for this very moment in history.