{"id":56315,"date":"2025-12-01T15:45:06","date_gmt":"2025-12-01T08:45:06","guid":{"rendered":"https:\/\/hbbgroup.net\/rising-japanese-bond-yields-could-shake-global-carry-trade-crypto\/"},"modified":"2025-12-01T15:45:06","modified_gmt":"2025-12-01T08:45:06","slug":"rising-japanese-bond-yields-could-shake-global-carry-trade-crypto","status":"publish","type":"post","link":"https:\/\/hbbgroup.net\/vi\/rising-japanese-bond-yields-could-shake-global-carry-trade-crypto\/","title":{"rendered":"Rising Japanese bond yields could shake global carry trade, crypto"},"content":{"rendered":"
\n

Japanese government bond yields have jumped to their highest level in decades, prompting some analysts to speculate that it could be behind the recent crypto market sell-off on Sunday.\u00a0<\/p>\n

Japan\u2019s 10-year government bond yield hit 1.86% on Monday, its highest level since April 2008, according<\/a> to MarketWatch.\u00a0<\/p>\n

Yields in the 10-year bonds have almost doubled in Japan over the past 12 months. Japan\u2019s two-year bond yields also hit 1% for the first time since 2008.\u00a0<\/p>\n

While 1.86% is not a substantial yield from government bonds, it is significant because it marks a shift, as Japan has had a very low interest rate environment for decades, with negative or close to zero rates prevailing for the most part, and a very stable bond market.\u00a0<\/p>\n

This has encouraged institutional investors around the world to borrow low-interest Japanese yen to buy higher-yielding, riskier assets, in a strategy known as the \u201cYen Carry Trade<\/a>.\u201d<\/p>\n

\u201cTrillions borrowed in yen, deployed into US Treasurys, European bonds, emerging market debt, risk assets everywhere,\u201d explained<\/a> economics author Shanaka Anslem Perera, who said, \u201cThat anchor is now breaking.\u201d<\/p>\n

Japan’s 10-year bond prices hit their highest level since 2008. Source: MarketWatch<\/em><\/figcaption><\/figure>\n

Japan\u2019s bond yield hike is bad timing for US<\/h2>\n

Japanese institutions hold approximately $1.1 trillion in US Treasury securities, and is the largest foreign position, explained Perera.\u00a0<\/p>\n

\u201cWhen domestic yields rise from nothing to nearly 2%, the math changes. Capital that flowed outward for decades faces pressure to repatriate.\u201d<\/p><\/blockquote>\n

Related: <\/strong><\/em>Bitcoin crashes 5% in \u2018Sunday slam\u2019 as liquidations surge<\/strong><\/em><\/a><\/p>\n

The timing couldn\u2019t be worse for the United States, as it comes when the Federal Reserve terminates quantitative tightening, and when the US Treasury requires record issuance to finance $1.8 trillion deficits, he stated.\u00a0<\/p>\n

\u201cWhen the world\u2019s creditor nations stop funding the world\u2019s debtor nations at artificially suppressed rates, the entire post-2008 financial architecture must reprice.\u201d<\/p><\/blockquote>\n

Analysts warn of possible flight to safety ahead<\/h2>\n

This could impact the cryptocurrency market in several ways. Bitcoin (BTC<\/a>) and cryptocurrencies typically thrive in an era of ultra-loose monetary policy and low interest rates globally.\u00a0<\/p>\n

When Japan provided an abundance of cheap money through the carry trade, some of that capital flowed into riskier assets, such as crypto and US tech stocks.\u00a0<\/p>\n

If that liquidity reverses and flows back to Japan, there will be less speculative capital available for crypto markets.<\/p>\n

\u201cCrypto is usually the first place where all of this shows up. It sits at the highest end of the risk spectrum, so even small shifts in liquidity lead to sharp moves,\u201d said<\/a> DeFi market analyst \u201cWukong.\u201d\u00a0\u00a0<\/p>\n

If global bond markets reprice violently, investors typically flee to safety first, resulting in a sell-off of all risk assets as people scramble for cash and liquidity.<\/p>\n

Magazine: <\/strong><\/em>Animoca\u2019s bet on altcoin upside, analyst eyes $100K Bitcoin: Hodler\u2019s Digest<\/strong><\/em><\/a><\/p>\n