Rewritten Version:
A surge in Japanese bond yields is beginning to challenge Bitcoin’s recent rally, which saw the asset gain roughly 8% in under a week amid changing expectations for global interest rates.
Japan’s 10-year government bond yield has jumped to a 30-year high of 2.85%, rising 18 basis points this month and pushing borrowing costs higher across major developed economies.
In the U.S., the 10-year Treasury yield has moved closer to 4.5%, while Germany’s 10-year bund is approaching 3% and the U.K.’s 10-year gilt is near 4.8%. Real yields—adjusted for inflation—are also on the rise, tightening financial conditions globally.
For years, Japan’s ultra-loose monetary stance, including near-zero rates and aggressive stimulus, helped anchor global yields. This environment encouraged carry trades, where investors borrowed cheaply in yen to invest in higher-yielding assets abroad, effectively keeping borrowing costs low worldwide.
This shift is important for bitcoin because higher bond yields raise the opportunity cost of holding non-yielding assets. Funds allocated to BTC forgo the steadier returns now available in fixed-income markets.
The latest rise in yields risks undermining the boost bitcoin received earlier this month, when expectations for additional U.S. rate hikes began to ease.
That shift followed comments on July 1 from Federal Reserve Chair Kevin Warsh, who signaled that inflation pressures were moderating, along with a weaker-than-expected U.S. jobs report that showed slower hiring and a drop in labor force participation to a multi-year low of 61.5%.
Bitcoin found support near $58,000 at the start of July and climbed toward $64,000 on the back of those developments. However, the renewed increase in global yields—led by Japan—could limit further upside.
Still, not all analysts are concerned. Goldman Sachs expects the yen to continue weakening and maintains its preference for carry trades funded in the Japanese currency.
