Japan's Market Turmoil Raises Concerns for Global Liquidity and Crypto Markets

Japan's financial markets are under pressure, with the Nikkei 225 falling 2% and wiping out $150 billion in equity value. The yen weakened past 160 per dollar, its worst level since a coordinated intervention between Japan and the US in late July.

The intervention cost Japan a record $98.7 billion, but it's already losing its grip. Japanese 10-year bond yields hit a fresh 30-year high of 2.95%.

US forces struck Iranian rocket launchers near the Strait of Hormuz over the weekend, their first military action in a month. Oil prices jumped in response, with Brent crude surging 5% to $90.61 a barrel and US benchmark crude rising 2.7% to $85.66.

The link between Japan's market stress and Bitcoin lies in the yen carry trade. Investors have long borrowed cheap yen to fund higher-yielding positions elsewhere. As Japanese bond yields rise, that funding becomes more expensive, forcing some trades to unwind and tightening global liquidity.