Japan's reverse carry trade may shake crypto market: These 5 altcoins are worth buying if they surv

Japan's reverse carry trade may shake the crypto market: If the market stabilizes under the September shock, these five altcoins are worth noting.

The rise in Japan's interest rates may make yen financing positions less attractive, thereby increasing selling pressure on leveraged global assets. However, the unwinding of carry trades does not necessarily have the same impact on all altcoins, especially when funds flow back into projects with stronger fundamentals.

Macro background: yen appreciation and capital return expectations

The so-called "carry trade" refers to investors borrowing low-interest-rate currencies (such as yen) to purchase foreign high-yielding assets. However, as Japanese interest rates rise and the yen strengthens, profit margins for such transactions are shrinking, potentially causing investors to reduce their positions in the stock, bond and cryptocurrency markets.

Japanese authorities have used substantial resources to support the yen exchange rate, and the market expects the Bank of Japan (BOJ) to further discuss the possibility of raising interest rates at its September 17 - 18 meeting. Currency intervention, rising domestic interest rates and changes in expectations for Japan's monetary policy have together intensified the market's attention to capital inflows.

For the crypto market, the core concern is not Japan selling a particular asset, but what will happen if global leverage starts to decline. A stronger yen would increase financing costs, while higher Treasury yields would make assets traditionally seen as safer more attractive. This combination may put pressure on speculative assets in the first place, especially when traders start to liquidate leveraged positions.

Still, the unwinding of carry trades does not mean that all cryptocurrencies will fall to the same extent. Projects with active development teams, institutional use cases, real-world asset (RWA) exposure, or strong network activity are likely to regain investor interest once broader liquidity conditions stabilize.

Five major altcoins worth paying attention to

1. Solana (SOL): The intersection of institutional activity and decentralized finance (DeFi)

Despite the weak performance of some sectors of the Solana ecosystem, SOL remains one of the largest and much-watched altcoins. In its latest ecosystem update in August, the network estimated its real-world assets at approximately $4 billion and maintained its expansion momentum in stablecoin trading, tokenized stocks, DeFi usage and institutional adoption. If the market environment improves, SOL will no longer rely on a single encrypted narrative, and its fundamentals will be sufficient to support its development.

2. Quant (QNT): Interoperability is becoming increasingly important

Quant continues to focus on interoperability between traditional financial systems and blockchain networks through its Overledger technology. This positioning may become more relevant as banks and financial institutions increasingly look at how different digital asset networks communicate.

Recent market reports have also highlighted institutional interest in QNT, although the token's price fluctuates sharply and is well below previous market highs.

3. NEAR (NEAR): Artificial intelligence and chain abstraction drives narrative

With the strengthening of artificial intelligence (AI) and chain abstract narratives, NEAR has recently regained market attention. In recent transactions, the token has experienced fluctuations of 8% to 11%, reflecting investor rotation towards AI-related crypto assets. At the same time, its broader strategy continues to emphasize simplifying the interactive experience across different blockchains.

This creates a different landscape between NEA and traditional Layer-1 competitors. If liquidity returns to high-beta altcoins, its positioning in terms of AI and interoperability may still be an important catalyst.

4. Ondo (ONDO): Tokenized assets continue to grow

Ondo remains one of the clearest targets for the expansion of real-world assets tokenization in the crypto market. The project continues to develop tokenized stocks, treasury bonds and other financial products, and recent initiatives have further expanded access to tokenized securities.

Ondo reported earlier this year that it has approximately $2 billion in tokenized treasury bonds and continues to expand its financial infrastructure. This makes ONDO particularly relevant in the context of the current institutional themes of the crypto market.

5. Avalanche (AVAX): Institutional tokenization takes a place

Avalanche has recently gained new attention in the traditional financial sector. Hanwha Investment & Securities announced the construction of a tokenization platform based on Avalanche, adding another institutional use case to the network.

The network also continues to position its infrastructure to serve institutional applications and tokenized financial assets. If capital eventually flows back into blockchain infrastructure, AVAX is expected to benefit from this institutional attention.

Future Outlook

The Bank of Japan meeting in September could become an important test point for global liquidity, especially if Japanese interest rates rise and the yen strengthens further. Therefore, the most critical signals for crypto traders may come from U.S. Treasury yields, U.S. dollar/yen exchange rates, leverage levels and whether Bitcoin can hold key support levels.

SOL, QNT, NEAR, ONDO and AVAX each have different catalysts, but their near-term performance will still depend largely on whether the broader market can absorb potential liquidity shocks without triggering a broader deleveraging cycle.