Japan is poised to become one of the key nations to watch in 2026 after Sanae Takaichi’s landslide victory in the snap elections celebrated on Sunday.
The Liberal Democratic Party (LDP), helmed by Prime Minister Takaichi, obtained a supermajority in the lower house of Japan’s legislature, winning 316 of the 465 seats at stake. Furthermore, an allied party, the Japan Innovation Party, also obtained 36 seats, giving the alliance power to rewrite the Japanese Constitution if it deems it necessary.
With the full support of the Japanese people, Takaichi’s victory is seen as a mandate, and she is expected to press on with her proposals, including a stimulus package and the elimination of 8% food sales tax for two years.
Nonetheless, these measures can work as a double-edged sword for Japanese citizens, as the increased liquidity in markets could push the yen to slip even further, prompting monetary interventions that could involve a U.S. Treasury sell-off.
According to Gugaonchain, a financial analyst, Takaichi’s historic bitcoin will cause capital flows from U.S. ETFs to Japanese bons, straining international indexes and pushing them down. As bitcoin has shown a positive correlation with stock indexes, it means that it also risks further declines after the recent recuperations towards the $70K level.
He stated:
“The Takaichi Trade strengthens Japan but puts pressure on the U.S. and Bitcoin. The capital flight to JGBs and a robust dollar create an environment of inevitable adjustments, requiring investors to closely monitor the correlation between U.S. indexes and crypto assets.”
However, Takaichi’s upcoming policies are still not set in stone, as she hinted at the benefits of a weak yen before the election but later retracted, clarifying that she did not offer clear support for a weak or a strong yen policy.
Read more: Bitcoin Plunges to $83K as Markets Cower Before Japan’s Massive Stimulus Package
- Who is Sanae Takaichi and what recent achievement has she accomplished?
Sanae Takaichi, leader of the Liberal Democratic Party, achieved a significant victory in Japan’s snap elections, securing a supermajority in the lower house. - What are the implications of Takaichi’s election win for Japan’s legislature?
With the LDP and its allied Japan Innovation Party controlling a majority of seats, they can potentially rewrite the Japanese Constitution. - What economic policies is Takaichi expected to implement?
Takaichi plans to introduce a stimulus package and temporarily eliminate the 8% food sales tax, although these measures may impact the yen’s stability. - How might Takaichi’s policies affect international markets and bitcoin?
Analysts suggest that her policies could lead to capital flows from U.S. ETFs to Japanese bonds, affecting U.S. stock indexes and potentially causing declines in bitcoin values.
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