Bitcoin is under renewed selling pressure as surging Japanese bond yields and a weakening yen spark risk aversion across global markets.
After touching record highs in both dollar and yen terms last week, Bitcoin’s rally has stalled amid growing concern that Japan’s expansionary policies could tighten global financial conditions.
Prime Minister Takaichi Sanae’s commitment to Abenomics-style stimulus has driven expectations of heavier government borrowing, pushing Japanese government bond (JGB) yields sharply higher. The 10-year JGB yield hit 1.70% on Wednesday — the highest since July 2008 — while the 30-year yield briefly reached 3.34% before easing to 3.16%, according to TradingEconomics.
Rising yields typically pressure risk assets by lifting borrowing costs and reducing liquidity, with investors shifting toward safer debt instruments. Although Bitcoin is often described as a hedge or “digital gold,” it continues to move in tandem with equity markets — particularly high-beta tech stocks.
Global Impact of Japan’s Bond Market
Strategists warn that Japan’s bond volatility could ripple into global debt markets. Goldman Sachs estimates that every 10-basis-point rise in JGB yields could add 2–3 basis points of upward pressure on U.S., German, and U.K. yields, according to Bloomberg.
That spillover could further challenge global risk assets, including cryptocurrencies, which have benefited from years of ultra-loose monetary policy and low yields.
Dollar Strength Adds to Bitcoin’s Challenges
At the same time, the U.S. dollar index (DXY) has climbed to a two-month high, supported by a 3.5% drop in the yen since Friday. The yen’s weakness reflects fading expectations of a near-term Bank of Japan rate hike following Sanae’s renewed support for easy-money policy.
A stronger dollar often tightens global liquidity and limits upside in Bitcoin, gold, and other dollar-based assets.
While Bitcoin’s price momentum has cooled, gold has broken above $4,000 per ounce, underscoring investors’ preference for traditional safe havens amid rising yields and currency volatility.
The Bigger Picture
Japan’s sharp bond market move underscores a key shift in global macro conditions. If yields remain elevated and the yen continues to weaken, the resulting financial tightening could cap Bitcoin’s near-term upside — at least until investors regain confidence in risk assets.
