Cryptocurrency markets remained lower on Friday as macroeconomic signals from Japan, one of the world’s largest economies, added to uncertainty caused by the war in Iran.
Bitcoin hovered near $77,800, after struggling to surpass Thursday’s high of $78,700 in early Asian trading hours, according to CoinDesk data. 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, was trading around $2,300, down 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 Business Services Price Index (CSPI) rose 3.1% year-on-year in March, beating forecasts of 3.0% and highlighting continued price pressures in the services sector.
Other government data showed core inflation rising to 1.8% in March from 1.6% in February, marking the first acceleration in five months. Headline inflation rose slightly to 1.5% from 1.3%, although it remained below the Bank of Japan’s 2% target for the second consecutive month. At the same time, core inflation, which excludes both fresh food and energy, fell to 2.4%, its lowest level since October 2024.
Rising headline inflation aligns with rising energy costs linked to geopolitical tensions, particularly disruptions to oil shipments through the Strait of Hormuz amid the ongoing Iranian conflict.
Japan, a major crude importer, remains particularly vulnerable to such price shocks. WTI crude futures have risen more than 40% to $96 since the Iran war began in late February.
Market participants are now turning their attention to the upcoming Bank of Japan policy meeting. InvestingLive analysts suggest a change in tone could be imminent.
“The Bank of Japan looks set to hold fire next week, but it is issuing a sharp warning that rates will rise, with June firmly in play as war-related inflation risks rise,” the analysts said.
Hints of tighter monetary policy and possible rate hikes could push the Japanese yen (JPY) higher and influence global market sentiment. This is particularly plausible today, given that speculative positioning on 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. A sudden appreciation of the currency could therefore trigger an unwinding of these transactions, leading to increased risk aversion.
Speaking of the war in Iran, Iran deployed additional naval mines in the Strait of Hormuz this week, according to Axios. Maritime traffic via Hormuz, which
represents 20% of the world’s maritime oil, a figure that has fallen sharply since the intensification of the conflict.
The Pentagon has warned lawmakers that it would take at least six months to clear the strait, with the process not beginning until after the war ends. He also warned that U.S. inflation could remain high this year, which could make it harder for the Fed to cut rates.
