Bitcoin Struggles as Japanese Bonds Surge & Yen Takes a Dive – What’s Next?

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Markets

What to Know:

  • Bitcoin finds itself under pressure as Japanese bond yields rise. Shocking, isn’t it?
  • Goldman Sachs, the ever-cautious bunch, fear that the hardened Japanese yields might lead to an increase in borrowing costs worldwide. Nothing like a global crisis to spice up the day!
  • The dollar index is rising, while the yen is depreciating faster than an awkward conversation at a dinner party.

Oh, how quickly fortunes can change. Just recently, Bitcoin was having a glorious time, reaching new all-time highs in both U.S. dollars and Japanese yen, buoyed by the new Japanese prime minister, Takaichi Sanae’s *charming* bias for ultra-easy Abenomics. His policy was a ray of sunshine… at least for Bitcoin, until it wasn’t. It seems that the very thing that helped Bitcoin shine is now turning the spotlight off, thanks to a most inconvenient rise in bond yields.

One of the key features of Abenomics (or, if you prefer, the magical art of fiscal spending) is to keep the government’s hand in the economic cookie jar, increasing spending to stimulate growth. A noble enough cause, until you realize that this could lead to more bonds being issued. And, much like bad gossip at a tea party, this only worsens the already gloomy fiscal outlook.

Lo and behold, Japanese government bonds are now pricing in the possibility of more bonds, which has been pushing yields to new heights. A staggering 1.70% on the 10-year JGB yield! This is the highest it’s been since 2008-oh, the nostalgia of financial crises past. And the 30-year yield? A brief flirtation with 3.34%, before falling back to 3.16%. A rollercoaster ride, indeed.

Now, rising bond yields are not the darling of investor risk appetites. No, they make borrowing more expensive, which in turn makes stocks and cryptocurrencies (like Bitcoin) look like overpriced trinkets at a street market. Some analysts still think of Bitcoin as a ‘risky asset’-imagine that!-and others consider it digital gold, though history has shown that Bitcoin prefers to shadow tech stocks more closely. How very predictable.

But wait! There’s more. The rising JGB yield is causing concern far beyond the Land of the Rising Sun. According to the ever-so-serious Goldman Sachs, volatility in Japanese bonds could soon spill over into global treasury notes. Oh joy, just what we needed-more market jitters.

In a market note (which one presumes was delivered with all the gravitas one might expect from Goldman), they warned that for every 10 basis point “idiosyncratic JGB shock,” expect about two to three basis points of upward pressure on U.S., German, and U.K. yields. Talk about a ripple effect. A market-wide tantrum, if you will.

The Strength of the Dollar

The dollar index, much like an overzealous gym-goer, has climbed to a two-month high, likely fueled by the yen’s sad 3.5% decline against the USD since Friday. Poor yen-it’s like watching a slow-motion collapse of a poorly-constructed soufflé.

The yen’s decline, as with most things in life, is also tied to Abenomics. The policy calls for low interest rates, which have led to a less-than-sparkling probability of a Bank of Japan rate hike anytime soon. Even the possibility of a little financial tightening is slipping away faster than the yen’s value.

The dollar index-otherwise known as the DXY-includes six major fiat currencies. The euro gets the largest slice of the pie, followed closely by the yen. And when the DXY rises, it tends to tighten financial conditions, putting a cap on the upside for assets like BTC and gold. Really, what’s a little financial tightening among friends?

And while Bitcoin may be experiencing a lull in its rally, gold remains untouched. In fact, it’s pushing through $4,000 an ounce, as investors continue to flock to it like bees to honey. Because, apparently, gold knows how to keep its cool.

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2025-10-08 12:51