Bond Market Turmoil Sends Bitcoin into Choppy Waters

The global bond market has been in turmoil as yields on long-dated sovereign bonds have risen sharply, pushing Japan's 30-year JGB yield to a record high of 4.18%. The US Treasury yield also jumped to a multi-year high, reaching 4.78%.

Japan's Finance Ministry is facing a dilemma: if it raises interest rates to support the yen, it risks operating losses that could feed into its balance sheet. On the other hand, forcing repatriation of capital without selling Treasuries could be difficult, especially with US financing needs remaining substantial.

The market is speculating about whether Japan might rely on a mechanism that creates dollars using Treasury holdings. This would allow Tokyo to borrow dollars against Treasury holdings and then sell them for yen, potentially strengthening the currency without triggering a domestic bond-market shock.