On the last trading day of the week, cryptocurrency markets moved quietly amid ongoing uncertainty. Fresh economic data out of Japan and rising tensions in Iran have together fostered a cautious mood across investors. The leading cryptocurrency, BTC, struggled to break above the $78,700 mark reached Thursday, as the upward momentum seen since late March began losing steam at the start of this week.
Japan inflation outpaces forecasts, sparks crypto volatility
Japan, one of the world’s largest economies and closely watched by crypto investors, delivered inflation figures above expectations in March. The Services Sector Wage Index rose 3.1%, signaling ongoing price pressures within the sector. Additionally, core inflation rebounded for the first time in five months, reaching 1.8%, while overall inflation climbed to 1.5%. Despite these increases, both remain below the Bank of Japan’s 2% target. Excluding fresh food and energy, the so-called ‘core-core’ inflation actually fell to 2.4%, its lowest since October 2024.
These numbers, together with swings in the yen and shifting appetite for Japanese assets, applied notable pressure to crypto prices. Investors have flagged the risk that rising energy costs, alongside higher inflation in Japan, could further strain markets.
Geopolitical risks weigh on outlook
Tensions in Iran continued to cast a shadow over markets, especially as disruptions in oil transit through the Strait of Hormuz intensified concerns. According to coverage from Axios, Iran laid additional naval mines in the strait this week, significantly curbing commercial activity through a channel that carries nearly 20% of the world’s seaborne oil. The U.S. Department of Defense informed Congress that clearing these mines could take at least six months even after hostilities end.
Oil prices have surged dramatically under these pressures. The WTI contract has gained over 40% since the end of February, reaching as high as $96 per barrel. This rapid escalation has direct consequences for heavily oil-dependent countries such as Japan, potentially reinforcing stubborn inflation at home and globally.
Eyes on the next Bank of Japan meeting
Market attention now turns to the upcoming critical meeting of the Bank of Japan. According to analysts cited by InvestingLive, the central bank is expected to keep rates steady for now, but may adopt a more hawkish tone, signaling possible rate hikes in the near future. With inflation risks driven by geopolitical tensions, speculation is rising that a rate increase could come as early as June.
Analysts note that if the Bank of Japan toughens its rhetoric or flags higher rates, the yen could appreciate sharply, triggering pronounced volatility across global markets.
Recent data from the CFTC shows that most speculative positions on the Japanese yen are currently short. Should the central bank surprise markets with a rate hike or hawkish messaging, a sudden and robust surge in yen buying could follow in the short term.
Historically, the yen has been a preferred funding currency for acquiring riskier assets. Any swift appreciation could therefore elevate risk aversion, leading to selling pressure not just in crypto but across a range of financial instruments.
BTC ended the week trading sideways near $77,800, maintaining a cautious stance. Ethereum, meanwhile, hovered near $2,300, posting a modest loss of 0.8% for the day. BTC saw a smaller daily dip, with its decline limited to 0.6%.
