Japan’s New PM Boosts Optimism for Markets and Crypto

Japan’s political pivot—with Sanae Takaichi emerging as the likely next prime minister—has already sent ripples through financial markets. 

Overview

Equities are rallying, the yen is weakening, and investors are eyeing opportunities in risk assets, including cryptocurrencies. According to TradingView, Japan’s Nikkei index rose 4.75% on Monday to a new all-time high close of 47,734.04. The surge came after Takaichi’s victory in Saturday’s election, positioning her to make history as Japan’s first female prime minister when she assume office on October 15 2025. 

CEO of the dYdX Foundation, the nonprofit organisation behind the decentralised trading protocol dYdX, Charles d’Haussy said,

“Iron Lady San Takaichi’s election as Japan’s PM is boosting crypto sentiment among local investors through expected looser monetary policies that have already driven Bitcoin to a record high against the yen […].”

d’Haussy added,

“Beyond markets, her supportive regulatory approach may bring more regulatory clarity and spur digital asset adoption in the country.”

Pro-Growth Politics and Markets in Thrust Mode

Takaichi’s election as leader of the ruling Liberal Democratic Party (LDP) has triggered abrupt shifts in sentiment. Japanese equities vaulted sharply—Tokyo’s Nikkei index soared to all-time highs. Meanwhile, the yen fell precipitously, crossing the ¥150 threshold versus the dollar. 

Investors are placing bets on what is being dubbed the

“Takaichi trade”

— namely, a regime of expanded fiscal stimulus, dovish monetary policy, and a weaker yen that supports exporters and asset prices.  Short-term bond yields have softened in some maturities, reflecting a less urgent need for rate hikes by the Bank of Japan (BOJ).  Conversely, long-dated yields have jumped amid concerns over Japan’s already large debt load. 

For risk assets globally, this shift is being interpreted as another tailwind in a global environment where easy central banking is being challenged. With the US government in partial shutdown, investors are increasingly chasing sources of yield or

“real”

returns beyond traditional safe havens. 

Crypto’s Coming Ride – Or Reckoning

Given the backdrop, cryptocurrencies are set to benefit — at least in the near term.

Sentiment & Capital Flow

Bitcoin (BTC) surged past $125,000 as markets reacted to the Japanese political moves. That rally is partly fueled by reallocations from fiat currencies (especially the weaker yen and dollar) into perceived digital hedges.  Investor mood is increasingly pro-risk, which tends to favour crypto flows.

Regulatory Signals & Tax Reform Prospects

Takaichi’s record offers some hints about her stance on digital assets. As a former internal affairs minister, she once supported making crypto donations to politicians legal and less burdensome under disclosure rules.

With a pro-innovation and pro-growth posture, she may lean toward clarifying regulation and aligning crypto tax treatment more favourably—perhaps treating gains more like equities. Japan’s Financial Services Agency (FSA) has been advancing proposals to reclassify cryptocurrencies as

“financial products”

under existing securities laws, paving the way for exchange-traded products and standardised trading oversight.

Under Takaichi, momentum behind such reforms might accelerate, giving institutional investors more confidence. However, risks remain. The political coalition dynamic is fragile, and her ability to pass sweeping reforms is uncertain. Also, with inflationary pressures or global rate headwinds, the BOJ could be pressured into a policy shift—undermining risk assets.

Where the Risks Lie & How to Position

While the upside is compelling, there are important caveats to watch.

Implementation credibility: Bold proposals must pass through cabinet formation, LDP internal factions, and a coalition with Komeito. Political constraints could hobble stimulus plans. 

Fiscal strain & debt markets: Japan already carries one of the highest debt-to-GDP ratios among advanced economies. More stimulus could push bond markets to rebel, especially if global interest rates rise. 

Monetary policy push-back: The BOJ may resist extended dovish drift if inflation accelerates or market expectations diverge. 

Global macro shocks: Crypto markets are susceptible to US interest rates, regulatory shifts, and macro surprises beyond Japan.

Positioning Pointers

• In the near term, overweight positions in equities (especially export-oriented and tech names) may pay off, with a potential tailwind for crypto allocations.
• Hedged exposure in crypto (e.g. using options or delta-neutral structures) can help manage volatility and guard against sudden reversals.
• Monitor Japanese government bond yields and currency moves as leading indicators of policy stress.
• Keep tabs on regulatory announcements — crypto-friendly reform signals could spark new momentum.

Japan’s pivot to a more aggressive, growth-oriented political posture under Takaichi may well catalyse a fresh “risk-on” wave — and crypto is riding shotgun. Yet success hinges on her ability to execute stimulus, manage debt dynamics, and shepherd coherent regulatory reform. If she pulls it off, the upside for both equities and digital assets is meaningful. But if policy overreach or backlashes emerge, markets could very quickly reassess.