The Japanese liquidity tap is closing. There turmoil in the Japanese bond market has already triggered several shock waves across global financial markets, contributing to a decline particularly in Bitcoin (BTC) and cryptocurrencies. This sharp rise in Japanese bond rates highlights the fragility of the global financial balance, and raises the question of the resilience of digital assets in the face of major economic turbulence.
The key points of this article:
The Japanese bond market has experienced extremely rare volatility, affecting global financial markets. The unprecedented rise in Japanese bond yields has caused major repercussions for global liquidity and cryptocurrencies.
An overall fall in markets due to the sharp rise in bond yields in Japan?
For several weeks, the bond yields of Japan increased at a rate that had not not seen since 2022. And this has multiple repercussions on the various financial markets around the world. During an interview held at World Economic Forum (WEF) Davosthe American Secretary of the Treasury, Scott Bessantnoted the exceptional appearance of this increase in Japanese bonds:
“I think the markets are down because the Japanese bond market has moved six standard deviations [NDLR : une variation extrêmement rare et brutale] over the last two days [de cotation]. »
Scott Bessent, Secretary of the Treasury of the United States
A Japanese bond crisis that has serious consequences for global liquidity
Indeed, the Japanese bond 10 ans passed of 2,18 % at the close of last week, Friday January 16, at 2.274 % (+9.5 basis points) at the close of Monday January 19, then at 2.341% (+6.8 additional basis points) at the close of Tuesday, January 20. It is never seen before since 2022 ! It's this unexpected flight yields on Japanese bonds which created the exceptional volatilityimpacting global markets. A movement of this magnitude is statistically extremely rare in a context of recent low volatility. Indeed, for years, bond interest rates have been ultra-bas from Japan (often less than 1% for the 10 years until recently). And the yen carry trade made it possible to support borrowing costs on a global scale, encouraging investment in higher risk assets, including the Bitcoin and cryptocurrency sector. However, current tensions in the Japanese bond market threaten to reverse this dynamic. While Japan is undoubtedly preparing to fight to stabilize its bond market (via intervention by its central bank), investors in cryptocurrencies must therefore remain vigilant in the face of these severe turbulence on global liquidity. Paradoxically, some analysts see this as a future opportunity: for example, Arthur Hayes Anticipates Japanese Yen Depreciation That Could Take Bitcoin to $1 Million.