XRP ALERT: JAPAN REVERSE CARRY TRADE UNWINDING NOW!?

7/3/26- JAKE CLAVER OUTLINES HOW XRP WAS BUILT FOR THIS MOMENT! 

Transcript

SPEAKER_02 0:00

Massive update for XRP investors. The third largest economy in the world just went all in on XRP. And during today's episode, we're going to be breaking down how inside of Japan, one of the largest payment providers in the country just onboarded 44 million users and over 23 billion dollars. Now, this all happened in the flip of the switch, turning loyalty points straight into XRP going forward. At the same time, SBI Senshi Bank is letting customers convert deposits directly into XRP. But that's only half the story that we need to be keeping an eye on. As analyst Jake Claver has been breaking down, we are warning about a reverse carry trade starting in Japan. As Japan is beginning to hike rates, trillions in cheap yen loans unwind and massive liquidity must flow back into the country of Japan. XRP's fast, cheap, and neutral settlement layer sits perfectly positioned as the bridge asset that will be the catalyst for this historic shift. Japan isn't just adopting XRP. They're positioning XRP as the escape hatch for the largest financial reset in decades. Hello and welcome back to another episode of Good Evening Crypto, your favorite crypto news related channel. If you enjoy this content, smash that like button and subscribe as you're gonna get an update every single day, 5 30 p.m. Eastern time. And to kick off today's show, we're gonna waste no time diving into the content we have prepared for today. But I would encourage all of our listeners to stick around until the end of the episode so you can fully understand the reverse carry trade and why XRP was always positioned to play an important role. But to kick off today's show, I wanted to briefly explain just how the reverse carry trade is gonna play such an important role for the XRP community. And I thought there would be nobody better to do it than our friend Jake Claver. But if you guys are a believer in the XRP narrative, leave some of your thoughts underneath the video. Here's what Jake had to say.

SPEAKER_00 1:42

Love to hear you quickly explain the reverse carry trade. Over the last 20 years, the Bank of Japan has had extremely low interest rates, sometimes zero and negative. They would pay you to borrow money, which seems crazy. But when you need and you're in stagflation and you need your economy to grow, you pretty much grasp it straws and do anything you can to get people to borrow money and spend it in your economy. So because of that, a lot of large pension funds, hedge funds, anybody that has good credit and a large stature witch to the Bank of Japan and borrowed yen, swapped that for dollars or whatever other currency and put that to work in global markets across the world. Basically free money that they got that they could then earn four, five, six, ten, twenty percent on, depending on their strategy and where they put it, parked it. And now that the interest rates have continued to rise there in Japan, a lot of those notes have to be refinanced. And some of those trades that made sense when they had low interest rates are starting to not make sense now as market dynamics have shifted and currency rate and exchange rates are changing, and the interest on those loans have risen substantially. So with that, there will be a global credit call across all markets and a liquidity crisis. So, you know, don't be caught with Japan's down. Hopefully you guys aren't leveraged up, but hopefully you're in the right assets and positioned well.

SPEAKER_02 2:52

So, what Jake is clearly outlining here is that for several decades, Japan has had super low interest rates, and investors have been borrowing huge amounts of capital inside of Japan, converting it to other countries and then deploying it in other capital markets. That's what you'll often hear referred to as the yen carry trade. But now Japan is beginning to raise rates. Borrowing the yen is no longer cheap, and the yen is strengthening in real time. Investors are being forced to repay these massive yen loans, and they're being forced to sell the foreign assets that they bought back then. So they're buying back the yen to repay this debt. And that sudden flow of selling and yen buying is what people call the reverse carry trade. It creates chaos in global markets. And when we saw this happen in 2024, we saw a near 30% correction instantaneously in many of our favorite assets in the crypto space. So if you're wondering how this is going to impact crypto, according to Jake, when the reverse carry trade unwinds, crypto will also go through a massive correction. But why does XRP sit in an extremely unique position? Because Jake Claver has often argued that this unwind, when it hits full speed, banks and institutions will need fast, cheap, and an institutional neutral settlement layer to move enormous amounts of value across borders without friction or a delay in time. Now, XRP is perfect for this use case because it settles in seconds, costs almost nothing, works 24-7, and is neutral, meaning it's not controlled by a single country's currency or their politics. In Jake's theory, Japan and the global institutions will leverage XRP to efficiently handle the massive reverse carry trade, creating an explosive new demand and potentially driving a reprice for the XRP currency because of this newfound volume and utility. And the reason that this concept is becoming more important than ever is because we are actively witnessing the Bank of Japan do everything they can to prevent this reverse carry trade from unwinding. As over the last 24 hours or so, the USD slash JPY just hit a 40-year high of 162.84, then suddenly crashed back down to 160.9, a nearly 1.8% drop in just a few hours. This is not normal market behavior, especially for Japan. And Japan spent over $73 billion in April and May doing exactly this selling dollars and buying the yen aggressively to defend the currency from extreme levels. Now, both times the chart showed the same pattern, a new extreme high, and then a sudden violent reversal. Now, there's been no confirmation yet, but the size and speed of this move points to one thing. Even after the drop, the yen is still trading near its weakest level in over 40 years. And if we look at the bond market as well, the Japanese 10-year bond has begun breaking out and it's about to go vertical. This is a crisis phase where we could easily see this go from 2.7, a 30-year high, to over 4% in just the next 60 days. How is the Bank of Japan going to respond? Will they end up selling US treasuries? And it's not just that, guys. The JPY sitting at 162 means the yen is extremely weak. And this is a major psychological level and technical barrier when you think about the reverse carry trade. It triggers a carry trade unwind of active borrowing, meaning the borrowing cheap yen to buy dollars and other assets. And it increases the pressure on the Bank of Japan to end up buying and intervening, buying yen to sell dollars to defend the currency status. Above 162 risks a massive panic globally, forcing the unwind of carry trades, potential market chaos, and exactly what could accelerate the reverse carry trade, just like Jake Claver has been outlining. Now, in short, if we hit this 162 mark and break it with volume, the yen trade will unwind in real time, which boosts the need for fast liquidity tools just like XRP. And if you're wondering what the impact will be on the crypto market, you don't have to take my word for it. Here's what Jake Claver had to say.

SPEAKER_00 6:24

For the reverse carry trade, you're going to see at least a 25 or 50% drawdown across markets. I think gold's probably a 30% drawdown, somewhere back to around $2,000 per ounce. I think gold, crypto, stocks, bonds, treasuries, everything is going to take a huge hit because the money that's been borrowed from the Bank of Japan has been put to work everywhere. Tens of trillions of dollars in every single asset class. It's not like it was uniquely positioned in just stocks or just treasuries. It's across the board. So when that gets called, you're going to see a mass liquidation across all markets, not just going to be one thing that's affected.

SPEAKER_02 7:02

So now that you guys have a clear understanding of just how XRP is positioned to benefit off this reverse carry trade, we also understand that there's going to be a massive correction across all capital markets, stocks, bonds, digital assets alike. We are going to see a sell-off, the likes of which we have never seen before. But this is where the Japan theory gets very interesting for XRP because what Jake Claver outlines is that XRP can be tapped as the liquidity solution. And this can be the one asset class that is scheduled to outperform. But if you're enjoying this content and you find this helpful, smash that like button and leave some of your thoughts underneath the video. Here's what Jake had to say about how XRP's position to save the day. Here it is.

SPEAKER_00 7:46

So this slams the FX market, the bond market and credit globally all at once. So what's gonna happen? It's not good, right? It's a tidal wave of capital surging back to Japan. Dollars, euros, and all of the other currencies that people are selling off to swap for the yen will crash and the yen will explode higher. Demand for the yen will be excessive. So US treasuries, they're gonna be dumped, yields are gonna spike, and the bond markets will break. Global liquidity will evaporate, just like in March of 2020, but much, much worse. The Bank of Japan will have two options they can either let the yen appreciate and kill their exports, or they can defend the bond market and risk hyperinflation because they're gonna have to print a bunch of yen in order to buy those bonds. It's a lose-lose situation, unless they have a third option sitting in the background. So this is where I think XRP might be the missing piece. So instead of dumping foreign assets directly into the yen, flows could be routed from, let's say, US dollars through XRP and then into the Japanese yen. XRP would serve as a liquidity buffer, routing flows around the FX bottlenecks, settles in three seconds, doesn't require correspondent banking, and it could scale globally if price and infrastructure allow it. So let's get into what would actually need to take place for this to happen. You got SBI and the Bank of Japan, they would have to have strategic alignment. And we know SBI is Japan's largest and most aggressive fintech institution, and they own part of Rivel. So they operate SBI VC trading, and they also use XRP for live FX remittance. The Bank of Japan is developing a CBDC, which has been in pilot since late 2023, maybe 24. And this would allow them to program the stability of the bond market. But they would definitely need a playbook for this. You'd have to route FX through XRP, you'd have to be able to issue or go live with that digital yen, you'd have to offer yield of rewards for people holding the bonds, and then absorb capital inflows without destabilizing the yen or bonds. Okay, so this is a tricky dance. It's not like it's an easy thing to do. But if you had a liquidity buffer like XRP that could expand and contract to be able to mitigate this risk and volatility, it's gonna be much easier to handle this situation when it happens. So how could this work? Like XRP needs to have a couple things happen. For five to $10 trillion to be repatriated into the yen, you couldn't use traditional FX markets. They would break. You need XRP liquidity pools large enough to absorb and route those flows. So let's do some math. To absorb $10 trillion in 30 days with about 5.5 billion XRP, and if that was turned over 10 times daily, XRP would need to be around $180 per token. This is a mathematical inevitability if it's going to serve in this purpose.

SPEAKER_02 11:02

And this is what we've talked about for a very long time is that if Ripple is going to accomplish their mission of creating the internet of value on the XRP ledger, we're going to need a dramatically higher price target than we're at today. And a lot of these conversations can be fun when you factor in the volume of Swift plus the acquisitions plus Ripple Prime. There is so much happening on the XRP network that it just goes to show there is so much volume in the works pent up behind the scenes that is ready to come onto these public blockchains. And I think the reverse carry trade could be one of those major catalysts that leads to this institutional repricing moment. We also have to factor in the Clarity Act here, because if the United States government is able to provide regulation, that is gonna allow American institutions to speculate in the same way we're witnessing Japan leverage this technology today. But if you agree there's something brewing for XRP, smash that like button. We're gonna let this clip play and break it down.

SPEAKER_00 11:52

It needs XRP liquidity for when this is going to happen. So let's break it down. What are all the things that actually have to happen for SBI, the Bank of Japan, and the rest of the world for this to take place? The Bank of Japan would have to authorize XRP in FX settlement systems. Okay, and we know that they've been building that in the background with Ripple for a long time. So probably in place. So it's possible. You would also need regulatory clarity in Japan for XRP. It would need to be approved as a settlement asset and also not have capital gains if it's being used in that capacity. You would need CBDC rails to go live with programmable yield to absorb the bond flows. And again, we know that that's been in pilot for a long time. So likely they probably have that in place. You would also need global partners to mirror those corridors for all of the currencies that we're going to be swapping back to the yen. So that's the US, it's Euros, and any other jurisdiction where people have borrowed yen to be able to put it into financial markets. And then last, XRP liquidity would need to be locked, incentivized, and scalable. So we need a significantly higher price for XRP for it to be able to facilitate this. And again, you know, there's a lot of ways that that could happen, but you need a supply shock on the asset. If we don't have something like this in place and $10 trillion unwind, you have a credit collapse. You have FX disorder, and you have central banks out of tools. So XRP is perfectly positioned for this. It's neutral, it's fast, it's ready, but it needs the adoption, liquidity, and price to fit this purpose.

SPEAKER_02 13:45

And so what I find so valuable about this analysis from Jake is he clearly outlines why a higher price is necessary in order to facilitate what we've been breaking down all throughout today's episode. And we're going to take a little bit of a tangent here, addressing how the Clarity Act could also play a very important role in the repricing of XRP. After the Clarity Act, utility-based pricing will take over, according to Charus on XRP. Once utility-driven growth models begin, only coins with real-world utility will grow and we will finally break away from this Bitcoin-dominated market. Market makers will no longer have the chance to manipulate prices, and coins with no utility will be delisted one by one for failing to comply with regulations. Now, right now, the US stock market stands at about $76 trillion, and the total value of global stock market is close to $150 trillion. When we factor in the derivatives market as well, including global debt and the DTCC, we're looking at more than seven to eight quadrillion dollars worth of value. And this is mind-boggling. This is the very clear answer to those who claim there isn't that much money in the world and that crypto cannot expand to these rapidly higher price targets. The crypto market, on the other hand, spans the entire world. And this is what the entire world is being driven into. You compare that to the global financial market that exists today, and you're looking at a $2 trillion market that could easily be worth dozens of trillions in just the next five or 10 years. I've been waiting six plus years, said Jerusan, and there are others who have been waiting even longer. I didn't wait six years just for XRP to hit $20. Once the utility-driven price begins, we will start to reap the rewards of our patience. And if you agree with that sentiment, guys, smash that like button and leave some of your thoughts underneath the video. I also wanted to provide some very interesting news we just got out of Japan. As I stated at the beginning of the episode, Rakudin, one of Japan's largest providers here, just onboarded 44 million users and 23 billion points in XRP. Now, SBI Sen Shai Bank is going to allow for customers to convert their deposits into XRP, while SBI Japan's CEO has said publicly every bank will use XRP and it will be very expensive. With that being said, here's a brand new clip out of Japan. So with Japan clearly going all in on XRP and doing everything they can to allow this ecosystem to flourish and survive, I want to hear from you guys. Do you believe that the XRP token will play a pivotal role in the reverse carry trade? If you enjoyed this content, smash that like button, subscribe to the channel, and we'll see you all in the next one. So if you're looking to implement the same strategies that we do here on Good Evening Crypto, I would encourage all of our listeners to click on the iTrust Capital link below and sign up to take advantage of tax-free crypto gains. Now that's not the best part. By leveraging the iTrust link below, you're gonna get a hundred dollar free signup bonus to start funding your iTrust Capital account. This is gonna give our listeners access to crypto assets in a Roth IRA product, allowing them to compound those gains tax free until they're 59 years old and held these funds for five years. So a really unique advantage. So if you're excited about the future of digital assets, I would encourage everybody to sign up for iTrust Capital so you can take advantage of those compounding gains tax free.