How Japan’s Yield Curve is Shaping Trends in Bitcoin and Bonds

Japan’s Long-Term Bonds Emerge as a Key Driver Behind Bitcoin’s Price Movement

Weston Nakamura, founder of Across The Spread and a macro strategist with a focus on Asian markets, reveals a compelling new connection between Bitcoin and Japanese government bonds that is reshaping global market dynamics.

Nakamura points out that Bitcoin (BTC) is increasingly mirroring the yield behavior of Japan’s 30-year government bonds rather than following the traditional correlation with U.S. equity indices such as the Nasdaq 100.

Despite Bitcoin’s occasional divergence from broader risk assets, its recent price action has aligned closely with the rising yields on long-duration Japanese bonds, both hitting record highs in recent months.

Key 2024 events, including the launch of spot Bitcoin ETFs in the U.S. and Donald Trump’s re-election, triggered short-term Bitcoin price rallies driven by market narratives. However, Nakamura highlights that Bitcoin’s overall trend has reverted to reflect movements in Japan’s long-term bond yields.

He stresses that this phenomenon is not just a secondary effect of U.S. Treasury yields but a direct influence stemming from Japan’s distinct bond market characteristics. Supporting this perspective, Nakamura cites U.S. Treasury official Scott Bessent’s remarks attributing Treasury yield fluctuations to global forces, notably the Japanese bond market, rather than to domestic U.S. political instability.

This insight raises the intriguing possibility that Japan’s bond market is indirectly shaping U.S. monetary policy by influencing the 10-year Treasury yield—a critical benchmark for policy decisions.

According to Nakamura, Japanese government bonds have become a pivotal force in the global financial ecosystem, impacting a broad spectrum of assets including cryptocurrencies, stocks, currencies, and precious metals. Investors should therefore keep a close eye on Japan’s bond market, as its influence on global asset prices is growing and could drive market movements across multiple sectors.