Japan threatens financial chaos: interest rates above 3% – what does that mean for Bitcoin?

Japan threatens financial chaos: interest rates above 3% – what does that mean for Bitcoin?

On July 9, 2025, an alarming trend was identified in the Japanese bond market that could potentially have global implications for financial markets. The yield on 30-year Japanese government bonds has risen to over 3 percent and is currently 3.065 percent. This is the first increase above 3 percent in almost 25 years. Japan, previously known for its zero interest rate policy and massive government bond purchases, is now facing a new reality. Analysts warn that this increase could mark the end of decades of monetary largesse, calling into question the stability of the global economy.

Liquidity in the Japanese bond market has deteriorated significantly in recent weeks. An auction of 20-year government bonds saw the largest price difference since 1987. The Bloomberg index of market liquidity is now alarmingly approaching the crisis levels of 2008. A rise in yields on longer-term bonds is exceeding that on shorter-term bonds, fueling uncertainty in the market. Despite these concerns, the Bank of Japan sees no need for action, which is further fueling nervousness in the financial markets.

Rising inflation expectations

The situation is further exacerbated by rising inflation expectations. Private households expect inflation of 12 percent in the coming year, while companies even expect inflation of over 5 percent in the next few years. The Bank of Japan holds over half of all outstanding government bonds, and the withdrawal of foreign investors is adding to the precarious situation. A further rise in yields could result in massive losses for the central bank and potentially lead to further money creation, which would only fuel inflation.

A significant domino effect could result in the liquidation of overseas investments by Japanese investors, with US and European markets particularly at risk. While policymakers downplay risks, market nervousness is growing and uncertainty remains about whether the situation will stabilize in the coming weeks.

Impact on cryptocurrencies

With interest rates rising in Japan, investors are wondering whether the Bitcoin price can maintain its stability. Bitcoin price is currently hovering around $108,800, stable above the $100,000 mark. Growing uncertainty over whether Bitcoin will prove to be a safe haven or a vulnerable asset in a global liquidity shock is causing mixed emotions among investors. The growing institutional interest in Bitcoin, with companies adopting BTC as a strategic asset, could influence the stability of the price in the coming weeks.

All of these developments highlight the tense economic conditions in Japan and the potential global consequences. Analysts from Newsbit as well as Kettner precious metals warn that the coming days could be crucial for the stability of the financial markets and the Bitcoin price. Events on the Japanese bond market are being watched particularly closely as the risks of a global financial crisis are once again on the agenda.