Markets are on edge as President Trump’s “Liberation Day” tariff announcement approaches, and Bitcoin is losing ground—especially against the Japanese yen. But while some in crypto are holding out hope that BTC will act as a hedge in times of turmoil, Goldman Sachs is looking elsewhere for safety.

The investment bank is turning bullish on the yen, calling it the top currency hedge against growing U.S. economic risks, including a potential recession and the fallout from new tariffs.

Bitcoin’s performance against the yen is showing signs of weakness. On Wednesday, BTC/JPY slipped 1% on Japan’s bitFlyer exchange, retreating from a key trendline resistance formed by its January 20 all-time high, according to TradingView.

Bitcoin also lost ground in dollar terms, while equities across Asia and U.S. futures held steady, with investors awaiting clarity on Trump’s trade stance. The new tariff package, expected to hit 15 countries, is raising fears of a broader slowdown — and that’s prompting some asset reallocation.

“Markets are clearly nervous,” said Kamakshya Trivedi, Goldman Sachs’ head of global FX and rates strategy. “If U.S. recession odds climb, the yen becomes the most attractive hedge.”

According to Trivedi, the yen also tends to shine when both U.S. equities and inflation-adjusted bond yields are falling — a scenario that increasingly looks possible as labor market data shows signs of softening.

Although Bitcoin is often framed as a digital version of gold, its market behavior remains closely aligned with high-beta tech stocks. That correlation means BTC may struggle to act as a true safe haven if risk assets continue to sell off in a tariff-driven downturn.

And there’s another dynamic at play: the unwinding of yen carry trades. When the yen gains strength, investors who borrowed it cheaply to finance riskier trades are forced to reverse those positions, amplifying volatility. Crypto traders know this all too well — last August, a yen surge helped trigger a rapid Bitcoin drop from $65,000 to $50,000.

Goldman expects the yen to strengthen further this year, with USD/JPY projected to fall into the low 140s. At last check, the pair was trading around 149.77. The currency outlook is supported by a narrowing yield spread between U.S. and Japanese 10-year bonds, as Japanese yields hit a new low not seen since August 2022.

While some crypto bulls are still betting on Bitcoin’s long-term potential, the near-term landscape suggests investors are favoring time-tested havens — and for now, the yen may have the edge.