Bitcoin held near $78,500 as the Japanese yen weakened past 160 per dollar in Tokyo, while a U.S. strike on Iran’s Larak Island added to geopolitical uncertainty. The market was already reacting to Friday’s dollar strength and hawkish comments from Warsh at Jackson Hole, which fueled expectations that the Federal Reserve could move toward higher interest rates.

The shift in rate expectations was also reflected in bond markets, where investors were positioning for a potentially more hawkish Fed. That repricing had contributed to institutional outflows from bitcoin ETFs during May and June. The yen’s role as a funding currency also makes its movements important for global markets, as investors frequently use yen-based financing to invest in U.S. stocks and Treasury securities.

U.S. Treasury Secretary Scott Bessent said Sunday that the yen’s recent decline remained controlled and did not warrant coordinated intervention from the U.S. and Japan. Reuters reported a similar assessment from Bessent.

Bessent had previously warned that a disorderly yen market could push U.S. interest rates higher. That potential spillover has placed the yen alongside Treasury yields and Fed expectations as an increasingly important factor for crypto investors.

Geopolitical Tensions Add to Market Pressure

The U.S. strike on Iran’s Larak Island introduced a new risk for investors already dealing with currency and interest-rate uncertainty. Oil prices moved higher and stocks declined after the attack, while bitcoin’s reaction remained relatively subdued.

Bitcoin Remains Around $78,000

Bitcoin’s daily decline stayed below 1% despite the yen crossing the 160-per-dollar threshold and tensions increasing in the Gulf.

The dollar’s continued strength has created pressure across risk assets. A stronger dollar has pushed the yen lower while limiting bitcoin’s gains, leaving BTC near $78,000 as traders weigh several competing macro factors.

The broader crypto market was mixed. Solana and Dogecoin each lost about 3%, while Ether, BNB, Zcash and Tron were little changed. Over the past week, Solana gained roughly 8%, whereas Dogecoin declined around 10%.

With Monday marking the final trading day of August, investors were focused on the month’s closing bitcoin ETF figures. The data will show whether the cryptocurrency’s eight-day ETF inflow streak remained intact after the recent change in interest-rate expectations.

Markets are also awaiting major U.S. economic reports, particularly nonfarm payrolls and consumer inflation data. The figures could influence expectations for the Federal Reserve’s September policy decision, while the final August ETF numbers may offer a more immediate indication of demand for bitcoin.

The U.S. dollar, the yen’s position near potential intervention levels and the outlook for Federal Reserve rates remain three key macro forces that could determine bitcoin’s next move.