Japan's government bond yields recently broke through 2.125%, hitting the highest level since 1999, causing turbulence in the global financial markets. Many investors are beginning to wonder: will the storm in traditional finance also impact the cryptocurrency market?

## Why the Japanese Bond Market Suddenly Plummeted

The root cause of this downturn is actually quite straightforward—it's the collision of two forces. On one hand, government fiscal spending is out of control: the cabinet has introduced a 21.3 trillion yen stimulus plan, where will the money come from? Simply by issuing大量 bonds. The market has seen the national debt soar to over 260% of GDP, prompting widespread sell-offs and a surge in yields. On the other hand, the central bank is forced to break with convention: Japan's central bank has maintained near-zero interest rates for a long time, but with inflation exceeding the target for 24 consecutive months, further rate hikes are imminent. Once rate hike expectations heat up, bond prices immediately fall, and yields rise accordingly.

The logic behind these numbers is actually brutal—the government is borrowing money wildly, the central bank is shrinking liquidity, and debt interest is snowballing, ultimately leading to imbalance.

## The Domino Effect on the Global Financial System

Japan's turmoil is far from an isolated event; it has triggered a chain reaction. The most direct impact comes from the reverse operation of carry trades: in the past, international capital relied on cheap yen to borrow大量 yen to buy US Treasuries, emerging market stocks, and other high-yield assets. Now that Japanese interest rates are rising, the cost structure of these trades is disrupted, causing capital to unwind and leading to significant capital outflows from emerging markets.

The US Treasury market has also not been spared. As the world's largest holder of US debt, if the domestic bond market crisis worsens, Japanese financial institutions will inevitably consider selling US Treasuries to stop the bleeding. This chain reaction is rewriting the direction of global asset prices, and as a risk asset, the cryptocurrency market's volatility will be further amplified. For long-term holders of Bitcoin and other mainstream cryptocurrencies, understanding these macroeconomic shifts becomes even more crucial.