Japanese government bond yields surged to their highest levels in decades during the first trading session after the Bank of Japan raised its policy rate, adding another macro headwind for Bitcoin and the broader cryptocurrency market. Japan’s 10-year government bond yield climbed 10 basis points to 3.075%, its highest level since August 1996, while the five-year yield rose 10 basis points to a record 2.375%. The 20-year yield advanced 8 basis points to 3.9% and the 30-year yield rose 6 basis points to 4.13%.
The BOJ raised its policy rate from 1% to 1.25% on Friday, and Governor Kazuo Ueda signaled that more hikes could follow. After the decision, the yen weakened, prompting Japanese authorities to conduct currency market rate checks several hours later. Masayuki Koguchi, executive chief fund manager at Mitsubishi UFJ Asset Management, told Reuters that interest rates are being reviewed globally and Japan’s rates are particularly low, so when the market finds a negative cue, the selloff accelerates.
The move matters for crypto because Japan has historically been a source of cheap yen funding for global carry trades. A disorderly unwind could pressure leveraged positions, but so far the yen’s weakness after the BOJ decision reduces the immediate risk of a repeat of the August 2024 carry trade episode. Higher domestic yields could also encourage Japanese institutions to keep more capital at home. BlackRock previously examined a hypothetical 5% reallocation of Japan’s roughly $1.1 trillion in US Treasury holdings, which could shift around $55 billion toward Japanese assets, though it stressed the calculation was a scenario, not a forecast.
Bitcoin is already facing pressure from US rates. The benchmark 10-year Treasury yield rose nearly 14 basis points to 5.106%, its highest since 2007, while two-year yields climbed above 4.89%. Fed funds futures now price a 66% probability of another rate hike in October, up from 53% earlier Wednesday. Bitcoin traded around $77,500 on Sept. 1 even with positive spot Bitcoin ETF flows, showing that macro rate concerns are dominating crypto-specific demand signals.
