Japan 10-Year Bond Yield Records 30 Year High
Bitcoin selling pressure started last week when Japan’s 10-Year Government bond yield surpassed 3% on September 1, and has been hovering around this level since October 1996. Growing concerns in global financial markets are justified considering Japan plays a significant role as a source of international capital.
The increase before the Bank of Japan’s (BoJ) interest rate decision on September 16 comes at a time when the yen continues to weaken. There are expectations of further rising interest rates as the BoJ remains committed to supporting the yen.
As the yen weakened to a 40 year low, pressure on policy makers to do more grew and was reinforced by the remarks by Scott Bessent, Treasury Secretary. He signaled that Japan was considering measures and policies to support their currency, signaling a tightening of monetary policies.
USD 10-Year Treasury Yields Adds to Pressure on Bitcoin
There are further signs of weakness in the bond market outside Japan in the US as the US 10-Year Treasury yield has surpassed 4.78% making them even more appealing than risky assets such as Bitcoin.
Higher fixed income government bonds can be even more appealing than Bitcoin and other high yielding, volatile assets.
As yields rise, investors sell speculative assets and buy government bonds.
The US government is thinking about using $1 trillion of Treasuries to buy back bonds in the market. This would make markets more liquid and less stressed about upward pressure on yields. There are also inflation pressures and higher oil prices that are more important and will keep upward pressure on yields.
The effect of Rate Hikes on Bitcoin
The Bank of Japan and the Federal Reserve may trigger additional interest rate increases, and liquidity conditions may worsen.
Investors withdraw capital from risk investments because higher interest rates increase the cost of capital. Because of this, Bitcoin may experience additional selling pressures.
Rate Hikes Could Push Bitcoin to $70,000
According to this crypto analyst Ali Charts, Bitcoin’s price has similarities with its 2023 bottom pattern and is currently testing resistance within a falling channel three times before a 20 percent drop.
He said BTC’s price needs to test resistance one more time to form a breakout. According to the pattern, bitcoin may experience a greater decline and a target price may be reached at $70,000.
September’s Importance for Bitcoin
The macro environment of the US and Japan is important this month. The Federal Reserve has a scheduled FOMC meeting on September 16 and so does The Bank of Japan, on the same day.
Current prediction market data shows that 71% of investors think the Fed will raise interest rates in 2026. If that interpretation is correct, Bitcoin will continue to weaken.
Long term price of bonds rising, combined with inflation worries, a weaker yen, and potential rate hikes will make the near term trading environment more volatile for Bitcoin. Traders will pay close attention to comments made by central banks and whether BTC will continue to protect key support levels with the ongoing turbulence in the global bond market.
