Rising bond yields and debt levels in Japan and the United States could be good news for Bitcoin (CRYPTO: BTC), The Kobeissi Letter said Sunday.
What Happened: In an X thread, the capital markets commentator pointed out the surge in Japan’s 40-year government bond yield, which has jumped from around 1.3% two years ago to 3.5% as of this writing. Moreover, the benchmark 10-year yield hovered near 1.51%, its highest level in two months.
The increase began when the Bank of Japan stopped buying bonds, leading to a larger bond supply in the market and higher yields.
The Japanese government holds $7.8 trillion of debt, making it the third most indebted government globally, behind the U.S. and China, The Kobeissi Letter said. Japan’s debt-to-GDP ratio recently exceeded 260% for the first time, according to Reuters, the highest among developed economies.
A similar situation was 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 pointing out that, unlike the U.S., a significant portion of Japan’s debt is held by domestic investors and entities, including the central bank, according to Reuters.
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,” The Kobeissi Letter said, implying that the leading cryptocurrency’s safe haven demand could skyrocket.
Why It Matters: Similar observations were made by entrepreneur and investor Anthony Pompliano last week.
He stated that Bitcoin’s ongoing bull run was driven by expectations of stronger growth, higher inflation and a higher for longer interest rate policy
Price Action: At the time of writing, BTC was changing hands at $109,683.31, up 1.60% in the last 24 hours, according to data from Benzinga Pro. Over the last week, the asset has risen 5.84%.
Photo Courtesy: Antonio Gravante On Shutterstock.com
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
