Examining how Japan’s bond market could decide Bitcoin’s next move
High bond yields could squeeze liquidity, hurting risk assets like BTC.
Bitcoin’s [BTC] being hit from all sides, and the pressure has never been higher.
Japan’s bond market is set to impact BTC more than you’d think, and corporate treasury buying might just be the saviour.
Here’s what you need to know.
Is Japan’s bond stress a Bitcoin macro risk?
The country’s 10-year and 20-year government bond yields have climbed to 30-year highs. The 10-year yield rose by 137 basis points over the past year, and another 9.1 basis points in just four weeks!
This, on the back of a difficult time: Japan is mobilising over 370 trillion JPY in public and private investment by fiscal 2040. This could mean more bond issuance, while the Bank of Japan also reduced its JGB holdings.
There’s a supply-demand problem. More bonds may need buyers just as the biggest buyer steps away. If Japanese yields keep rising, capital funded through cheap yen borrowing could start coming back.
This matters for Bitcoin [BTC], because lower global liquidity hurts risk assets.
ETF outflows add pressure as corporate buyers step in
Bitcoin is already under pressure right now, with a massive fall from its $126,000 ATH. Spot Bitcoin ETFs saw more than $5 billion in net outflows through late June, so institutional demand has slowed in a higher-rate environment too.
However, corporate treasuries are still buying.
In fact, public companies have over 1.26 million BTC, implying that there’s some support while ETF investors pull back.
What’s left to be seen is whether corporate accumulation can offset ETF selling. This would be important if bond yields rise and risk appetite goes weak.
Bitcoin needs a clean break
At the time of writing, BTC appeared to be seeing some quick relief, with the monthly candle up around 9% and the price near $63,870. This, after months of pressure.
Even so, the recovery isn’t set in stone yet.
The immediate level to watch is the monthly high near $64,600. A big move above that will show buyers regaining their strength.
However, the pace remains mixed. The RSI was not strongly bullish, and MACD was also weak. Corporate demand may be offering support, but Bitcoin still needs ETF inflows and better (note, calmer) bond markets to turn this bounce into a recovery.
Final Summary
- Japan’s 30-year-high bond yields might affect global liquidity and risk assets, including BTC.
- Corporate treasuries holding over 1.26 million BTC may provide support, but ETF outflows will keep things fragile.
