Bitcoin News Update: Japan's Bond Turmoil Triggers Worldwide Crypto Sell-Off Amid Yen Carry Trade Reversal

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Bitcoin News Update: Japan's Bond Turmoil Triggers Worldwide Crypto Sell-Off Amid Yen Carry Trade Reversal

Bitget-RWA2025/11/21 07:50

By:Bitget-RWA

- Japan's $135.4B stimulus package triggered a 3.41% surge in 30-year bond yields, destabilizing the $20T yen carry trade and sparking global crypto/stock selloffs. - Rising yields threaten Japan's 230% GDP debt load with higher servicing costs, creating a "debt death spiral" risk as BOJ hesitates to tighten policy. - Forced deleveraging by financial institutions intensified Bitcoin's 26% drop, with Ethereum/XRP/Solana also falling 3-5.6% amid margin calls and capital repatriation. - Upcoming 40-year bond

The Underlying Cause

Crypto

Is Tumbling as the

Bitcoin

Value Drops Under $86,000

On November 21, 2025, Bitcoin’s value plunged beneath $86,000, representing one of the sharpest drops in recent months. The broader cryptocurrency market followed suit, echoing a worldwide selloff sparked by unexpected upheaval in Japan’s bond sector. While factors such as ETF withdrawals and geopolitical strife played a role, experts highlight a more fundamental problem: a rapid rise in Japanese government bond yields destabilized the yen carry trade—a long-standing source of global liquidity—prompting widespread forced selling of risk assets, including digital currencies

according to analysis

Japan’s 30-year bond yield jumped to 3.41%, its highest since 1999, after the government revealed a $135.4 billion stimulus plan to help households cope with inflation

according to reports

. Although the package aimed to boost domestic spending, it instead sent ripples through international markets. With Japan’s debt now over 230% of GDP, higher yields could add billions to annual interest payments, pushing the nation closer to a potential “debt death spiral”

as financial data shows

. The Bank of Japan, caught between rising prices and fiscal challenges, has stated it will keep a close eye on economic indicators but has not yet moved toward stricter monetary policy

according to market analysis

Bitcoin News Update: Japan's Bond Turmoil Triggers Worldwide Crypto Sell-Off Amid Yen Carry Trade Reversal image 0

As Japanese bond rates increased, the yen gained strength against the dollar, eroding the profitability of the yen carry trade—a strategy where investors borrow yen at low rates to invest in higher-yielding assets abroad. This approach,

estimated to underpin $20 trillion

in leveraged bets, is now rapidly reversing. Financial firms are being forced to reduce leverage by liquidating assets such as stocks, technology shares, and cryptocurrencies to cover margin calls and return funds to Japan

as financial institutions report

. “The whole structure is unraveling as liquidity dries up,” one analyst observed, explaining that Bitcoin’s 26% fall from its October high is a result of this forced deleveraging rather than a panic based on sentiment

according to market analysis

Japan’s economic and monetary decisions now represent a major threat to global financial stability. If the upcoming 40-year bond auction sees weak demand, as indicated by a low bid-to-cover ratio,

according to financial analysis

yields could rise even further, intensifying the selloff. Should the Bank of Japan opt to hike rates in December—something markets currently see as having a 51% chance—the yen could appreciate more, worsening the decline. On the other hand, keeping monetary policy loose risks runaway inflation,

as market data suggests

The downturn is not limited to cryptocurrencies. Asian equities, particularly Japan’s Nikkei, experienced steep losses as investors anticipated more instability, while gold and other stocks also dropped

according to market data

. For digital assets, the situation is aggravated by existing challenges, such as waning institutional interest and uncertainty surrounding U.S. Federal Reserve actions

as financial reports indicate

Ethereum

XRP

, and

Solana

all dropped between 3% and 5.6%, with blockchain data revealing increased activity from short-term holders—a trend often observed near market lows

according to analysis

For those investing in cryptocurrencies, the takeaway is unmistakable: broad economic forces, not just crypto-specific factors, shape market movements. “This is not a standard correction—it’s a worldwide liquidity crunch,” said Shanaka Anslem Perera, an analyst quoted in several reports. As volatility persists in Japan’s bond market, ongoing instability in crypto and other risky assets is likely until liquidity strains ease

according to financial analysis

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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