Japan’s Bond Market Turmoil Sparks Global Financial Tremors, Bitcoin in Crosshairs

Japan’s bond market is erupting, and Bitcoin is bleeding. A 4% yield on 40-year debt isn’t just a Tokyo story—it’s a global liquidity shockwave.

The 40-year Japanese government bond yield hit 4.2% in a weak auction with a bid-to-cover ratio of 3.19, below its 12-month average. This follows the Bank of Japan’s December rate hike to 0.75%, the highest in nearly three decades. Political uncertainty, including snap election risks, has further amplified pressure on long-end yields.

BlackRock noted in a recent analysis:

"Bitcoin has historically shown sensitivity to USD real rates, similar to gold and some emerging market currencies, even if its fundamentals do not depend on any single country’s economy."

Bitcoin fell 5.5% in a single session after BOJ Governor Kazuo Ueda’s hawkish remarks, extending its monthly decline to over 20%. A Bank for International Settlements study underscores how Japan’s tightening policy triggers FX carry trade unwinds, which force rapid liquidation of risk assets—including Bitcoin—as leverage is withdrawn from global markets.

Look, the yen carry trade unwind isn’t just a technicality. It’s a liquidity shift that directly pressures Bitcoin’s price by reducing risk-on capital flows. When investors scramble to deleverage, Bitcoin’s volatility makes it one of the first assets to get sold.

⚠️ LEGAL DISCLAIMER: This article is for informational purposes only and does not constitute financial or investment advice.