Japan’s Prime Minister Sanae Takaichi faces a notable drop in public support, with approval ratings falling below 50% for the first time since she took office in October 2025. This shift has market watchers bracing for potential changes in fiscal policy that could influence the yen and ripple through both stock markets and cryptocurrencies.
Approval Ratings Slide and Political Backdrop
Takaichi entered office on a wave of optimism, securing a commanding supermajority for her Liberal Democratic Party (LDP) in the February 2026 snap election. Her approval ratings soared to 68% by June, reflecting strong public backing. However, a recent poll from mid-July now reports a dip to 49%, marking the first time her cabinet's support has dropped below the critical 50% line. Elderly voters, uneasy about persistent inflation and controversial legislation, contributed heavily to the decline.
The Fiscal Policy Shift and Market Impact
The anticipated move toward looser fiscal spending risks weakening the yen. A weaker yen generally benefits export-driven Japanese equities, helping the Nikkei to climb, as seen after the February election when it surged past 56,000. Yet the currency depreciation also pushes Japanese investors toward dollar-denominated assets such as cryptocurrencies as a hedge. Earlier this year, Bitcoin nearly hit $72,000 following her electoral win, and a Solana-based meme coin inspired by Takaichi briefly reached a $30 million market cap before crashing, illustrating the unpredictable crypto market reactions.
Yen fluctuations play a key role in crypto liquidity through carry trades, where investors borrow yen at low interest rates to invest elsewhere. Should Takaichi's spending lead to a rapid yen drop, the Bank of Japan could intervene or tighten monetary policy sooner, a move traditionally harmful to crypto valuations. Despite the approval slump, Takaichi's supermajority gives her substantial power to pursue fiscal changes that might have far-reaching market consequences.
