Surging Japanese bond yields are impacting U.S. rates and could hinder risk assets.
By Omkar Godbole|Edited by Sheldon Reback Jul 7, 2026, 7:50 a.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Rising Japanese yields pose a risk to Bitcoin's recent gains. (AhmadArdity /Pixabay) SummaryShow- The yield on 10-year Japanese government bonds has surged to a 30-year peak, increasing borrowing costs globally and threatening Bitcoin’s recent upswing.
- Higher bond yields globally raise the opportunity cost of holding Bitcoin, which yields no interest, potentially negating the advantages from easing U.S. inflation and disappointing job growth.
- While Bitcoin's price has risen by 8% to $64,000 this month due to changing Federal Reserve interest rate expectations, some financial institutions, like Goldman Sachs, still prefer yen-based carry trades.
Bitcoin is facing challenges from rising Japanese bond yields, which have offset the cryptocurrency's recent gains attributed to changing interest rate expectations, resulting in an 8% increase in less than a week.
The yield on the 10-year Japanese government bond (JGB) has reached a 30-year high of 2.85%, marking an 18 basis point increase since the beginning of July and pushing borrowing costs higher in other developed markets.
In the U.S., the 10-year Treasury yield has risen nearly three basis points, approaching 4.5% for the first time in close to a month, while the German 10-year bund nears 3%, and the U.K. 10-year gilt yields around 4.8%. Real yields, adjusted for inflation, are also on the rise.
For an extended period, Japan maintained low global yields through near-zero interest rates and aggressive quantitative easing, which facilitated carry trades that involved borrowing yen at low rates to invest in higher-yielding bonds elsewhere, thus indirectly keeping borrowing costs in advanced economies low.
This situation is significant for Bitcoin, as higher government bond yields increase the opportunity cost of holding an asset that does not generate income. Funds invested in Bitcoin are not earning the more reliable returns that fixed income offers.
Recent yield increases could reverse the benefits seen from this month's developments that led traders to lower their expectations for rising U.S. interest rates.
The first trigger was on July 1, when Fed Chair Kevin Warsh indicated that inflation is less of a concern than previously thought. The second was the recent nonfarm payroll report for June, which revealed that the U.S. economy added only about half the expected number of jobs, while the labor force participation rate dropped to a five-year low of 61.5%.
Bitcoin found substantial support around $58,000 on July 1 and has since climbed to approximately $64,000, largely driven by these factors. However, the increase in global yields, especially from Japan, could dampen this upward momentum.
Nonetheless, some analysts remain optimistic. Despite the rise in Japanese yields, Goldman Sachs maintains a preference for yen-funded carry trades and expects the yen to continue its decline.
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