Rising Bond Yields and Debt Levels in Japan and the United States Could Be Good News for Bitcoin

Rising bond yields and debt levels in Japan and the United States could be good news for Bitcoin BTC/USD, The Kobeissi Letter said Sunday.

Rising bond yields and debt levels in Japan and the United States could be good news for Bitcoin (BTC/USD), according to The Kobeissi Letter's latest analysis on X (formerly Twitter).

As capital markets commentator Kobeissi begins his post, he highlights the surge in Japan's 40-year government bond yield. From around 1.3% two years ago, the yield has climbed to 3.5%, while the benchmark 10-year yield is now hovering at 1.51%, its highest level in two months.

This increase began as the Bank of Japan stopped buying bonds, leading to a larger bond supply in the market and higher yields. The Japanese government also holds $7.8 trillion of debt, making it the third most indebted government globally, following the U.S. and China. Furthermore, Japan's debt-to-GDP ratio recently exceeded 260% for the first time, the highest among developed economies.

A similar situation is unfolding in the U.S., where long-dated treasury yields have been pushed to levels not seen since October 2023, exacerbated by the passage of a sweeping tax-cut bill. It's worth noting that, unlike the U.S., a significant portion of Japan's debt is held by domestic investors and entities, including the central bank.

Typically, higher bond returns may reduce the appeal of riskier assets, such as stocks, leading to lower valuations. Additionally, it can make debt financing more expensive, driving inflation higher.

"Bitcoin loves all of this," concludes The Kobeissi Letter, suggesting that the leading cryptocurrency's safe haven demand could be booming amid these economic trends.

See Also: Bitcoin, Ethereum Rise, Dogecoin Dips After Trump Says He Will Delay 50% Tariffs On EU: Analyst Sees ‘Good’ Signs For BTC In The Coming Week

As capital markets commentator Kobeissi points out, the yield on 40-year Japanese bonds has surged to 3.5%, up from 1.3% two years ago, while the 10-year yield has hit 1.51%, its highest in two months.

This increase follows the Bank of Japan's decision to cease buying bonds, leading to a larger bond supply and higher yields. With $7.8 trillion in debt, Japan holds the third-largest government debt, following the U.S. and China, and the debt-to-GDP ratio has surpassed 260% for the first time, the highest among developed economies.

Moreover, long-dated U.S. treasury yields have reached levels not seen since October 2023, as the passage of a sweeping tax-cut bill has pushed yields higher.

It's important to highlight that, unlike the U.S., a substantial portion of Japan's debt is held by domestic investors and entities, including the central bank.

In contrast, higher bond returns might lower the attractiveness of riskier assets like stocks, resulting in lower valuations and more expensive debt financing, which could contribute to inflation.

"Bitcoin loves all of this," Kobeissi concludes, implying that the cryptocurrency's safe haven demand could be booming amid these trends.