Crypto markets edged lower on Friday as a combination of stronger Japanese inflation data, renewed geopolitical risks from the Iran conflict, and expectations of a more hawkish Bank of Japan weighed on broader risk appetite.
Bitcoin BTC traded around $77,800, struggling to build on momentum after repeatedly failing to break above Thursday’s peak near $78,700 during Asian trading hours, according to CoinDesk data. The broader recovery that began in late March from roughly $65,000 has begun to lose steam, with recent price action shifting into consolidation.
Ether ETH also moved lower, trading near $2,300 and falling about 0.8% since midnight UTC. That slightly underperformed Bitcoin’s 0.6% decline, underscoring a cautious tone across major digital assets.
Sentiment was dampened by fresh macroeconomic data from Japan. The Corporate Service Price Index (CSPI) rose 3.1% year-on-year in March, slightly above expectations and signaling persistent inflationary pressure in the services sector.
Japan’s core inflation also picked up to 1.8% from 1.6%, marking its first increase in five months. Headline inflation rose to 1.5% from 1.3%, though it remained below the Bank of Japan’s 2% target for a second consecutive month. Meanwhile, core-core inflation—excluding food and energy—eased to 2.4%, its lowest level since October 2024.
Energy markets remain a key source of inflation pressure, with geopolitical tensions driving concerns over oil supply disruptions through the Strait of Hormuz amid the ongoing Iran conflict. Japan’s reliance on imported energy leaves it particularly exposed. WTI crude prices have surged more than 40% to around $96 since late February as the conflict escalated.
Investors are now focused on the Bank of Japan’s upcoming policy meeting. While rates are widely expected to remain unchanged, markets are watching for signals that officials are shifting toward a tighter policy stance, with June increasingly seen as a potential turning point if inflation risks persist.
A more hawkish BOJ could strengthen the Japanese yen (JPY), which is currently positioned relatively bearish in futures markets. That setup leaves room for a sharp repricing if guidance surprises on the restrictive side.
However, yen strength could also have wider market implications. As a key funding currency for global carry trades, a rapid appreciation may trigger position unwinding, potentially increasing volatility across risk assets including equities and cryptocurrencies.
Geopolitical risks continue to add to market uncertainty. Reports indicate Iran has deployed additional naval mines in the Strait of Hormuz, a critical chokepoint responsible for roughly one-fifth of global seaborne oil flows. Shipping activity through the strait has already dropped significantly since tensions escalated, according to Axios.
The Pentagon has warned lawmakers that clearing mines from the Strait could take up to six months, with operations only feasible after the conflict ends. Officials also cautioned that sustained energy price pressures could keep U.S. inflation elevated, complicating expectations for Federal Reserve interest rate cuts later this year.
