Rising Japanese Bond Yields and a Falling Yen Weigh on Bitcoin’s Short-Term Outlook

Bitcoin is showing signs of weakness as Japanese government bond yields climb to multi-decade highs and the yen depreciates, curbing risk appetite across global markets.

Prime Minister Takaichi Sanae’s commitment to Abenomics-style stimulus initially boosted Bitcoin, helping it hit record highs in both USD and JPY. But the policy’s expansionary fiscal measures—driving higher government borrowing—are now pushing bond yields up.

The 10-year Japanese government bond (JGB) yield reached 1.70% Wednesday, the highest since July 2008, while the 30-year yield briefly touched 3.34% before dropping to 3.16%, according to TradingEconomics. Rising yields generally discourage investment in risk assets, including cryptocurrencies, by increasing borrowing costs.

Analysts warn that volatility in Japan’s bond market may ripple into global debt markets. Goldman Sachs notes that each 10-basis-point rise in JGB yields could lift U.S., German, and U.K. yields by 2–3 basis points, heightening uncertainty for risk assets.

Meanwhile, the U.S. dollar index (DXY) hit a two-month high, supported by a 3.5% decline in the yen, reflecting expectations of continued ultra-loose monetary policy from the Bank of Japan.

While Bitcoin’s rally has cooled, gold continues to climb, surpassing $4,000 per ounce, as investors seek safe-haven assets amid rising yields and currency volatility.