Japan might just be the next ticking time bomb for Bitcoin that everyone’s overlooking Japan’s 2-year and 5-year government bond yields just hit a 31-year high, while the 10-year yield is nearing 3%, the highest in about 30 years. On the flip side, Japan’s Q2 GDP only grew at an annualized rate of 1.1%, which is way below expectations. Here’s the tricky part: the economy is already cooling down, but the yen is still weak, and imported inflation pressures remain. The Bank of Japan (BOJ) might have no choice but to keep hiking rates. The market isn’t just betting on “another 25bp hike” anymore—it’s now wondering if Japan is about to enter a faster rate hike cycle. What does this have to do with BTC? For decades, Japan has been one of the cheapest sources of financing globally. Tons of money has been borrowed in low-interest yen to invest in U.S. stocks, U.S. bonds, emerging markets, and crypto. If the BOJ hikes rates and the yen appreciates rapidly, this carry trade could reverse: sell risk assets, buy back yen, and repay debt. So the real fear isn’t just “Japan hiking rates,” but this chain reaction: BOJ accelerates rate hikes → yen surges → global carry trades unwind → U.S. stocks and BTC get hammered together. We already saw a preview of this in 2024. Now, with Japan’s 10-year bond yield nearing 3%, if the yen quickly strengthens from 159 to around 150, I’d consider it one of the most critical warning signals for global risk assets. If Japan keeps heading down this path, it’s a short-term liquidity headwind for BTC. But in the long term, it gets even more interesting—how long can a country with government debt over 2x its GDP sustain high interest rates?