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Japan Stimulus Shakes Markets: Yen Sinks as Institutional Crypto Demand Surges - Crypto Economy
TL;DR
A mega-stimulus package of ¥21.3 trillion was recently approved by the Japanese government, the largest injection of funds since the COVID era, which unleashed a hurricane of reactions, affecting bonds, currencies, and the dynamics of the crypto sector.
With the approval of the stimulus package by the cabinet, the government seeks to boost growth and strengthen its defense capabilities, with a spending target of 2% of GDP by 2027. This immediately readjusted global expectations regarding risk.
Indeed, Japan’s package was approved at a delicate moment. GDP contracted by 0.4% in the third quarter of the year, and inflation remained above the Bank of Japan’s 2% target, reaching 3% in October. Authorities expect the new measures to raise real GDP by ¥24 trillion.

The Dual Impact on Bitcoin
The conditions described by the stimulus package are directly translating into the digital asset sector. The yen’s weakness generally encourages Japanese investors to seek alternative assets, including Bitcoin, especially in environments of increasing liquidity. This trend adds to an already favorable global outlook, which includes the potential easing by the U.S. Federal Reserve and liquidity support from China.
However, the risk of a rapid liquidation of the yen-carry trade poses a threat. If institutions are forced to unwind positions to cover liquidity needs, they could sell assets, including Bitcoin, to meet their obligations. So, the Japan stimulus package presents both a tailwind due to the yen’s weakness and a systemic risk due to the potential reversal of long-term debt.