Cryptocurrency markets remained on the defensive on Friday as macroeconomic cues from Japan, one of the world’s largest economies, compounded uncertainty fueled by the Iran war.
bitcoin was around $77,800, having struggled to surpass Thursday’s high of $78,700 during the early hours of Asian trading, according to data from CoinDesk. The broader uptrend, which began in late March near the $65,000 mark, appears to have stalled since Wednesday.
Ether (ETH), the second-largest cryptocurrency by market capitalization, traded around $2,300, falling 0.8% since midnight UTC and underperforming bitcoin’s relatively modest 0.6% decline.
The cautious tone in crypto markets coincided with new inflation data from Japan. The country’s corporate services price index (CSPI) rose 3.1% year-on-year in March, beating forecasts of 3.0% and underscoring persistent price pressures in the services sector.
Additional government data showed core inflation rose to 1.8% in March from 1.6% in February, marking the first acceleration in five months. Headline inflation rose to 1.5% from 1.3%, although it remained below the Bank of Japan’s 2% target for the second consecutive month. Meanwhile, core inflation, which excludes both fresh food and energy, fell to 2.4%, its lowest level since October 2024.
The spike in headline inflation aligns with rising energy costs linked to geopolitical tensions, particularly disruptions to oil shipments through the Strait of Hormuz amid the ongoing conflict with Iran.
Japan, a major crude oil importer, remains especially vulnerable to such price shocks. WTI crude oil futures have risen more than 40% to $96 since the start of the war with Iran in late February.
Market participants are now turning their attention to the Bank of Japan’s upcoming monetary policy meeting. InvestingLive analysts suggest a change in tone may be imminent.
“The Bank of Japan looks set to rein in action next week but will issue a clear warning that rates are rising, with June firmly in play as war-driven inflation risks rise,” analysts said.
Signs of tighter monetary policy and possible rate hikes could boost the Japanese yen (JPY) and influence global market sentiment. It is especially plausible now, given that speculative positioning in the yen is currently bearish, according to the latest CFTC data. As a result, there is room for a strong bullish reaction in the yen if the Bank of Japan becomes hawkish.
As for the broader impact on the market, a stronger yen may not be favorable. Historically, the yen has been used to finance purchases of risky assets around the world. Therefore, a sudden currency appreciation could trigger a cancellation of those trades, leading to greater risk aversion.
Speaking of the Iran war, Iran has deployed additional naval mines in the Strait of Hormuz this week, according to Axios. Maritime traffic through Hormuz, which
It represents 20% of the world’s seaborne oil, a sharp drop since the conflict escalated.
The Pentagon warned lawmakers that it would take at least six months to clear mines in the Strait, and that the process would only begin after the war ended. He also warned that inflation in the United States could remain elevated this year, which could make it difficult for the Federal Reserve to reduce rates.
