Japan’s current account in January reported a deficit of ¥257.6 billion, falling short of expectations of ¥-230.5 billion. This indicates a continued trend of negative balances in the country’s external accounts.
The overall crypto market capitalisation decreased by over $440 million last week, dropping to $2.66 trillion. This decline came despite recent regulatory developments and increased clarity regarding Bitcoin reserves.
Consumer Price Inflation Trends
Consumer price inflation exhibited initial strength in 2025, with estimates suggesting a 0.25% rise in the headline CPI and a 0.27% increase in the core index for February. The moderation in core index growth reflects a potential retraction in categories that surged in January.
A current account deficit of ¥257.6 billion in January shows that Japan’s external accounts remain under strain, with the reported figure missing estimates of ¥-230.5 billion. When export revenues and income from overseas fall short of covering import costs and foreign commitments, it raises concerns over capital flows. This also signals ongoing pressures on the yen, especially when combined with Japan’s monetary policy stance. We have observed that currency traders react strongly to persistent deficits, often factoring them into forward exchange rate positions. Given the scale of this shortfall, expectations around potential monetary responses or capital market shifts could start reinforcing speculative movements in asset prices.
In global markets, last week saw a decline of over $440 million in total cryptocurrency value, bringing the overall figure to $2.66 trillion. This retreat occurred despite regulatory efforts to clarify Bitcoin reserve mechanisms. Short-term traders had hoped for a stabilisation in valuations following increased oversight, yet the pullback suggests broader supply and liquidity dynamics remain at play. The price action highlights the sensitivity of digital assets to changing narratives around regulation and institutional involvement. As liquidity shifts, we anticipate leveraged positions encountering short-term fluctuations, with funding rates adjusting accordingly.
Inflation Data Outlook
Inflation data for early 2025 suggested a mixed picture. Headline CPI was estimated to have risen by 0.25% in February, with core CPI increasing by 0.27%. While this points to some ongoing price pressures, the slight pullback in core inflation indicates that earlier surges in key categories may be easing. Certain volatile components that drove January’s acceleration appear to be normalising, which could influence rate expectations. If sustained, this moderation might shape derivative pricing around inflation-protected securities and interest rate hedges. The debate now centres on whether this trend continues into subsequent releases or if underlying demand revives momentum.
