(TheStreet) - CNBC host Jim Cramer has tied the latest risk-off move in Bitcoin (BTC) and crypto stocks to mounting stress in Japan’s funding markets - and to Strategy’s increasingly tight link to Bitcoin.
“This kneejerk, somewhat vicious, decline smacks of anticipation of hedge funds blowing up over the Japan carry-trade, endless worries about ‘injudicious’ hypercaler spending and Strategy/Bitcoin given that at this level they are almost the same thing,” Cramer wrote in a Dec. 1 post.
In practical terms, he is flagging three connected pressures for traditional investors:
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Yen-funded carry trades becoming unstable as Japanese rates rise,
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High-growth “hyper-spender” equities coming under scrutiny as money gets more expensive, and
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Strategy (MSTR) trading like a leveraged Bitcoin proxy, meaning any sharp BTC move is immediately reflected in the stock.
Japan carry-trade fears spill into BTC
Analysts say the overnight drawdown in BTC during Asia hours followed a familiar macro pattern.
Two-year Japanese government bond (JGB) yields are trading near 1% and 10-year yields around 1.9%, their highest levels since 2008, while derivatives markets are pricing strong odds of another Bank of Japan rate hike in December.
Higher JGB yields make borrowing in yen more expensive and volatile. Global macro funds that borrow yen or use yen swaps to finance higher-yielding U.S. and European assets are being forced to cut back so-called “carry trades,” often de-risking by selling the most volatile positions first, including Bitcoin.
How the yen carry trade works
The “yen carry trade” is a strategy where global investors borrow Japanese yen at very low interest rates and use that cheap capital to buy higher-yielding assets abroad, such as U.S. stocks, bonds or even Bitcoin.
As long as Japanese rates stay near zero and the yen remains weak, the trade is profitable. But when Japan’s government bond yields rise, as they have in recent weeks, the cost of borrowing yen increases and the currency strengthens.
That forces leveraged funds to unwind the trade by selling risk assets, converting back into yen and repaying their loans, a process that can accelerate sharp sell-offs across crypto and tech markets.
Macro unwind widens to include tech ‘hyper-spenders’
In his post, Cramer also pointed to renewed stress in high-growth “hyper-spender” equities - large tech and AI names that have relied heavily on aggressive investment and persistent cash burn to capture market share.
As global rates rise, the cost of capital increases and investors become more sensitive to companies with large negative free cash flow, high R&D outlays or multiyear payback cycles.
The combination of yen carry-trade unwinds and higher global yields can therefore trigger a broader de-risking across tech, crypto and other high-beta assets simultaneously, creating the type of cross-asset “vicious decline” Cramer referenced.
Kobeissi flags discount between MSTR and its Bitcoin stash
Market commentators are also tracking how Strategy (NASDAQ: MSTR) trades versus the value of its Bitcoin holdings.
The Kobeissi Letter described the situation as “absolutely insane,” noting in a Dec. 1 post that MicroStrategy’s market capitalization had slipped about $10 billion below the market value of its BTC at one point during Monday’s session.
According to Strategy’s own disclosure page, the firm holds 650,000 BTC, worth roughly $55.6 billion at recent prices, against a market cap of about $47.7 billion and debt of $8.2 billion, implying that its net Bitcoin position remains in the same ballpark as, or slightly above, its equity value.
At the time of writing, Bitcoin trades around $85,389, down 6.48% over the past 24 hours with a market capitalization near $1.7 trillion, according to CoinGecko.
Strategy shares change hands near $161, down about 9% on the day and more than 50% over the past three months, as the stock continues to move in tandem with BTC while reflecting additional equity and leverage risk.
By Arjun Parashar
