Japanese government bond yields continued rising this week, with the 10-year JGB yield approaching 2.7%, increasing pressure on global funding markets.

For years, yen-funded carry trades have acted as a major source of low-cost liquidity flowing into U.S. Treasuries, equities, and higher-risk assets across global markets.

We saw similar episodes in 2022-2023 and again early 2025, when rising JGB yields contributed to carry trade unwinds, higher U.S. Treasury yields, and short-term volatility across equities and digital assets as funding costs increased and cross-border positioning adjusted.

Higher domestic yields in Japan may gradually pull some institutional capital back toward local fixed-income markets, particularly if global volatility remains elevated.

That could tighten liquidity conditions across equities, technology stocks, and crypto markets in the near term.

For digital assets, this reinforces a larger structural trend where sovereign bond markets are becoming increasingly important drivers of crypto price action alongside ETF flows and institutional positioning.

BTC and ETH are no longer trading purely on crypto-native narratives but are reacting more directly to the same liquidity, interest-rate, and macro signals shaping global financial markets.

Ryan Lee, Chief Analyst at Bitget Research

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