Why Japan’s Election Is a Rollercoaster for Bitcoin: Buckle Up!

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So, Japan just decided to play Monopoly and handed Prime Minister Sanae Takaichi the keys to the city-with a two-thirds majority in the Lower House on February 8. You’d think this was good news, right? Maybe for Japanese stocks, as they did a happy little jig to record highs right after the announcement, but for Bitcoin? Not so much. It’s like watching your favorite soap opera take a plot twist that leaves you wondering if you should keep watching or just switch to cat videos.

Now, don’t get me wrong. The market reaction was faster than a toddler running toward a chocolate cake. Stocks shot up, and the Nikkei was like that overzealous friend who can’t stop talking about their latest workout routine-just gaining and gaining. But while equities were partying, Bitcoin found itself on the sidelines, nervously sipping a flat soda.

Takaichi’s Victory Reshapes Capital Flows

Market watchers like Ash Crypto took to X (formerly known as Twitter. Remember when that was just for tweeting about what you had for lunch?) to announce that Japan’s stock market hit an all-time high post-election. I mean, who needs stability when you have optimism that could rival a motivational speaker at a self-help seminar?

However, not everyone was throwing confetti. Research firms were more cautious than someone on a first date, calling the election bearish for Bitcoin in the near term. Apparently, global liquidity is tighter than a pair of skinny jeans after Thanksgiving dinner, and capital flows are doing the cha-cha away from crypto.

Meanwhile, GugaOnChain noted that the “Takaichi Trade” isn’t just a simple exit stage left from U.S. assets; it’s more like a complicated dance where everyone is trying to avoid stepping on each other’s toes. Japanese Government Bonds, which have been more neglected than a high school yearbook, are suddenly back in style thanks to fiscal expansion.

As this happens, U.S. equities are feeling a bit under the weather. In the last week alone, the Nasdaq Composite took a tumble of 5.6%, while the S&P 500 and Russell 2000 also joined the pity party. Perhaps they should all just go out for ice cream to ease the pain.

With a stronger dollar strutting around like it owns the place, and yen weakness tightening financial conditions, Bitcoin tends to follow suit-like that one friend who can’t make a decision without consulting the group chat. If equities are skittish, Bitcoin is right there with them, clutching its teddy bear.

“The Takaichi Trade strengthens Japan but puts pressure on the U.S. and Bitcoin,” GugaOnChain remarked, probably while sipping a very expensive espresso. “The capital flight to JGBs and a robust dollar create an environment of inevitable adjustments, requiring investors to closely monitor the correlation between U.S. indexes and crypto assets.”

Weak Sentiment Now, Policy Tailwinds Later

As I write this, Bitcoin is hanging out just below $71,000-a 2% uptick today but down over 6% for the week. Talk about mixed signals! It’s like trying to decide if you’re hungry or just bored. Add to that the Bitcoin Fear and Greed Index, which just hit a six-year low. It’s like having a bad hair day, but for the entire market.

CryptoQuant chimes in with a report showing Bitcoin trading below its 365-day moving average. Spot and institutional demand are about as exciting as watching paint dry, and liquidity is tightening up like your grandma’s hug when she hasn’t seen you in a year.

But let’s not be too hasty. Japan’s political environment might be a different story. With a two-thirds majority, Takaichi can push through changes like a kid pushing their way to the front of the line at the candy store. And don’t forget about Web3 being framed as an industrial policy focus. Analysts are dusting off their crystal balls and expect discussions about crypto tax reform and stablecoin regulations to re-emerge. So, don’t lose hope just yet!

As XWIN put it,

“Near-term pressure on U.S. equities and Bitcoin is macro-driven, while Japan’s institutional reforms may support crypto markets longer term.”

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2026-02-09 14:26