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#Japanese Bond Yields Hit 16-Year High, Threaten #Crypto Liquidity

Japan's 10-year government bond yield reached 1.86% on Monday, the highest level since April 2008, raising concerns about potential impacts on global risk assets, including cryptocurrencies.

Yields on Japanese 10-year bonds have nearly doubled over the past 12 months. Two-year bond yields also hit 1% for the first time since 2008, according to MarketWatch data tracking the Asian fixed income market.

The increase marks a significant shift from Japan's decades-long environment of negative or near-zero interest rates. This low-rate regime encouraged institutional investors worldwide to borrow Japanese yen at minimal cost and deploy capital into higher-yielding assets through the yen carry trade strategy.

Economics author Shanaka Anslem Perera explained that trillions were borrowed in yen and deployed into U.S. Treasuries, European bonds, emerging market debt, and risk assets globally. Perera stated the anchor supporting this structure is now breaking as domestic Japanese yields rise.

Japanese institutions hold approximately $1.1 trillion in U.S. Treasury securities, representing the largest foreign position. When domestic yields climb from near zero to almost 2%, the economic calculus changes and capital faces pressure to return home, according to Perera's analysis.