Rising Japanese government bond yields are becoming a major risk factor for global markets, including Bitcoin and altcoins. BlackRock warned on Sept. 8 that Japan’s 10-year government bond yield briefly exceeded 3% for the first time since 1996, while the 30-year JGB yield reached a record 4.18%. This matters because Japan holds roughly $1.1 trillion in U.S. Treasury securities. For Japanese investors, a yen-hedged 10-year U.S. Treasury now yields about 2%, compared with roughly 3% on domestic Japanese bonds, reducing the incentive to send capital abroad.
BlackRock estimated that a hypothetical 5% shift in Japan’s Treasury holdings would redirect about $55 billion toward Japanese assets, equal to roughly 7% of the U.S. Treasury’s expected net borrowing during the quarter. Fitch Ratings reached a similar view on Sept. 9, saying higher Japanese yields could encourage domestic institutions to retain more capital at home, though it did not forecast a broad liquidation of existing bond portfolios.
The Bank of Japan has already raised its policy rate to 1% in June and left it unchanged in July. BOJ board member Kazuyuki Masu said on Sept. 10 that the bank may need to increase rates more rapidly if inflation accelerates, while a Reuters poll showed economists expect a rise to 1.25% during September. Japan’s current environment follows a coordinated yen-buying intervention with the U.S., the first joint operation of its kind since 1998. A stronger yen can reduce the value of unhedged overseas assets for Japanese investors and make domestic holdings more attractive.
EasyA co-founder Dom Kwok highlighted that Japan’s near-zero or negative interest rates for many years created cheap liquidity that fueled the “yen carry trade.” Investors borrowed yen at low rates, converted the funds into dollars and bought higher-return assets such as stocks, bonds and cryptocurrencies. If the yen strengthens and Japanese rates rise, the profitability of these trades falls, forcing investors to sell risky assets to repay yen-denominated debt. Kwok pointed to August 2024, when a BOJ rate hike to 0.25% triggered rapid yen appreciation, a sharp unwinding of carry trades and a global risk-off move that hit crypto markets.
On Sept. 10, the 10-year JGB yield traded near 2.91%, below its recent 3% peak, while the U.S. 10-year Treasury yield reached about 4.84% and the 30-year yield traded near 5.29%. Higher government bond yields can weigh on Bitcoin and other non-yielding assets by increasing returns from lower-risk securities and reducing liquidity for speculative markets. Bitcoin faced a possible decline toward $70,000 after retreating from $82,283 and struggling to hold the $78,000–$79,000 area, according to crypto.news. Upcoming U.S. consumer inflation data on Sept. 11 and the Federal Reserve’s Sept. 15–16 policy meeting will shape the next phase of bond and risk-asset competition. BlackRock remains underweight Japanese government bonds because it expects yields to face further upward pressure.
