Emergency ‘wall of liquidity’ to prop up Yen bullish for Bitcoin: Swan

Swan Bitcoin’s Dante Cook suggests that Bitcoin could benefit from the declining Japanese yen, depending on what the U.S. and Japan central banks do next.

A declining Japanese yen may end up a “disaster” for United States treasuries, which in turn, could be a boon to Bitcoin (BTC) as investors flock to alternative stores of value, according to an executive from Swan Bitcoin. 

At the time of publication, 1 JPY is the equivalent to 0.0064 USD, losing 2.39% strength over the past 30 days, as per Google Finance data.

“This spells disaster for Japan and the U.S. potentially, as Japan is the largest holder of U.S. treasuries, only 4% of its forex reserves are in gold, the rest are almost exclusively in U.S. treasuries,” Swan Bitcoin head of business Dante Cook explained in a May 8 episode of Bitcoin Daily.

Cook believes that unless the U.S. government intervenes with swaplines — which is an agreement between two central banks to exchange currencies — or backdoor liquidity, Japan will be forced to sell its U.S. treasuries, in order “to prop up its currency.”

He argues that the sell-off might create uncertainty in traditional securities and lead to a “massive wall of liquidity” entering the market which could benefit Bitcoin, as investors seek safer, alternative stores of value.

He explained that Bitcoin is already receiving a “wave of liquidity” from institutional investors since the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs in January.

Since its launch, the 11 spot Bitcoin ETFs have seen total net inflows of $11.78 billion, as per Farside data. Bitcoin is currently trading at $61,399, up 6.29% over the past week, according to CoinMarketCap data.

Cook further argued that the current state of uncertainty in the traditional financial markets would lead to more people looking beyond Bitcoin and investing in riskier crypto altcoins.

“Because the money is broken, more and more people are turning to gambling,” he claimed.

Related: World’s largest pension fund explores diversifying into Bitcoin

On top of this, Cook pointed to VanEck, a spot Bitcoin ETF issuer, which hasn’t been performing “great in the ETF race” but recently announced its MarketVector MEMECOIN index.

“It’s kind of shocking that an institution would offer this to retail clients, but I guess it’s not at the same time,” he added, reiterating the uncertainty in traditional financial markets.

The MEMECOIN index includes Dogecoin (DOGE) at 30%, Shiba Inu (SHIB) at 28%, PEPE (PEPE) at 14%, Dogwifhat (WIF) at 13%, Floki (FLOKI) at 7%, and Bonk (BONK) at 6%.