Good morning, and welcome to First Mover. Here’s what’s happening this morning:

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Bitcoin (BTC) traded higher for the second day as the yen and euro tanked against the dollar and a gauge of foreign exchange (FX) market volatility hit a two-year high.

The top cryptocurrency by market value neared $40,000, having jumped 3% to $39,000 on Wednesday, CoinDesk data shows. Ether (ETH), the second-largest cryptocurrency, rose 1%, topping $2,900.

The Japanese yen slipped to 130.80 per U.S. dollar, the lowest in 20 years. The currency has fallen more than 10% in seven weeks. While such rapid moves are the norm in crypto markets, they are rare in currency markets and perhaps damaging to nations. Sharp currency depreciation imports inflation and often has domestic investors pouring money into the perceived store of value assets like bitcoin and gold.

Bitcoin has recently been drawing a premium in Japanese yen markets. Still, it may be too early to say that cryptocurrency is the preferred safe haven of investors exposed to the yen's volatility.

"Bitcoin traded at a consistent premium on Japanese markets since the start of April," Dessislava Aubert, analyst at Kaiko Research, told CoinDesk in an email. "However, BTC-JPY trade volumes remained low, which does not indicate a durable increase in demand in local markets."

Aubert added that volumes could pick up if Japan decides to loosen its coin listing regulation.

Why is the yen falling?

Experts say increasingly divergent central-bank policies have driven the yen's slide this year. While the U.S. Federal Reserve hiked rates in March and plans to raise rates six more times by year-end, the Bank of Japan has remained committed to money printing.

"The growing monetary policy divergence between the U.S. Fed and the Bank of Japan alongside higher commodities prices have put significant pressure on the Japanese currency with the JPY touching 20-year lows against the U.S. Dollar," Aubert said.

Bitcoin's programmed tightening path

While the Bank of Japan is moving in the opposite direction from the Fed, bitcoin's monetary policy is on a programmed tightening path.

Bitcoin's pace of supply expansion is reduced by 50% every four years, and the so-called "reward halving" is due in 2024, after which the per block reward would drop from 6.25 BTC to 3.125 BTC.

Even so, the cryptocurrency has lost over 40% in five months, mainly due to the Fed rate hike fears.

By Omkar Godbole

The JPMorgan global FX volatility index, which tracks three-month option volatilities, has jumped to a two-year high of 10.20, according to data tracked by Bloomberg.

Bitcoin is widely considered a safe haven and digital gold in the crypto market. So, one may consider the rising FX volatility a boon for cryptocurrency.

However, past data suggests that cryptocurrency does well in a declining FX volatility environment.

Today’s newsletter was edited by Omkar Godbole and produced by Bradley Keoun and Stephen Alpher.