The Japanese yen continued its strong surge against the U.S. dollar as investors embraced its role as a safe-haven asset.

The USD/JPY exchange rate plunged to 139.92 on Tuesday, its lowest level since September last year and 11.5% below its highest point in 2024.

The Japanese yen continued its strong surge against the U.S. dollar on Tuesday as investors focused on the role of the Asian currency as a safe-haven asset.

By 07:17 ET (11:17 GMT), the USD/JPY pair dropped to 139.92, reaching its lowest point since September last year and trading 11.5% below the 2024 high.

This decline follows the broader weakness of the U.S. dollar and a surge in other developed-world currencies such as the euro, British pound, and Swiss franc. The Relative Strength Index for the US dollar Index, a popular gauge that weighs its performance against a basket of currencies, fell to 98, hitting the lowest level since April 2022.

The ongoing yen rally is having a broader impact on equities, Bitcoin, and altcoins. In an X post, BitMEX co-founder Arthur Hayes said that this performance will push leveraged traders to unwind positions in U.S. stocks and bonds, ultimately leading to higher bond yields.

I know Team Trump wants a weaker dollar, but a rapidly strengthening $JPY causes leveraged traders to unwind positions in US stocks and bonds. Thankfully $BTC knows that if bond yields rise, the BBC must print money. Yachtzee 😘😘😘😋😋 pic.twitter.com/9PAY40b2O5

There are already early signs this is unfolding. U.S. stock prices have sharply declined, with the Nasdaq 100, S&P 500, and Dow Jones indices falling into technical correction territory.

According to the Financial Times, Japanese investors have offloaded over $20 billion in international bonds. Most of these sales were in US government bonds. These activities are closely observed because Japan is the biggest holder of U.S. debt, amounting to $1.1 trillion.

A key driver behind these sales is the strength of the yen and rising bond yields in Japan. The country’s 10-year government bond yield has risen to 1.30%, sharply higher than the lows seen last year.

Bitcoin is slowly becoming a safe haven

According to Hayes, the surging yen and the plunging US dollar will benefit Bitcoin (BTC) as the Federal Reserve will be forced to print money using quantitative easing.

Meanwhile, there are increasing signs that Bitcoin is gradually evolving into a safe-haven asset. Spot Bitcoin ETFs recorded over $381 million in inflows on Monday, following $107 million on Friday. These inflows coincided with a sharp drop in the Dow Jones Industrial Average, which fell by more than 1,000 points.

Bitcoin has also dropped by less than 3% this year, while the top U.S. indices have fallen by double digits. As such, some analysts believe that it will eventually evolve into a safe-haven asset, similar to gold.

Such a move would likely lead to higher altcoin prices. Throughout history, altcoins like Ethereum (ETH), Solana (SOL), and Pepe (PEPE) have typically performed well during periods of strong Bitcoin performance.