From coindesk By Shaurya Malwa| Edited by Omkar Godbole

caution (CoinDesk archives)

What to know:

Crypto bulls may need to brace for some turbulence as Japan’s 20-year government bond yield surged to its highest level since 2008 in a move that has historically led to aversion from risk assets such as bitcoin (BTC).

The Japanese Government Bond (JGB) yield climbed to 2.265% last week, a level not seen since the global financial crisis, amid speculation of potential rate hikes by the Bank of Japan (BOJ) and rising inflationary pressures.

These are similar conditions to August 2024, where strength in the yen saw a global sell-off from equities to bitcoin, as CoinDesk reported at the time.

A surge in Japanese bond yields, coupled with geopolitical and economic uncertainties, is fueling concerns among traders that BTC could face a significant correction. Higher yields indicate that the Bank of Japan may raise interest rates to control inflation or manage its large public debt.

Rising yields in Japan often signal broader global economic uncertainty or tighter financial conditions. This creates a stronger yen, which can reduce the appeal of carry trades, where investors borrow in yen to invest in higher-yielding assets like BTC.