Rising Japanese bond yields are quietly reducing global liquidity, and Bitcoin is caught between two fires.

This is the main theme of the latest analysis from XWIN Research, in which the rising Japanese government bond yields are linked to the weak Bitcoin price.

How the Japanese bond market affects Bitcoin

The 10-year yield on Japanese government bonds recently reached 2.39%, the highest level since 1999. With about ¥390 trillion in government bonds, even a 1% increase could lead to tens of trillions of yen in unrealized losses for banks, insurers, and pension funds.

These institutions must then strengthen their balance. This means selling risky assets and bringing capital back home. Since Japan is the largest foreign creditor in the world, this repatriation leads to less liquidity worldwide.

Bitcoin, as a risky asset, is heavily dependent on global liquidity. History shows that the price rises during periods of cheap money and stagnates when interest rates rise. The current situation aligns with that pattern.

Stablecoin data shows more details. The ERC-20 stablecoin supply is back at an all-time high, meaning there is still a lot of capital on the sidelines. However, that money is not flowing into Bitcoin. By early 2026, approximately $9,600,000,000 in value left BTC, with these funds primarily going to stablecoins.

Rising interest rates not only create selling pressure. They make borrowing more expensive, reduce the use of leverage, and discourage new capital from investing in risky markets. Moreover, the relative strength of the yen pulls capital away from dollar-denominated assets, including crypto.

XWIN Research says that understanding Bitcoin now requires more than just looking at on-chain metrics. Interest rates, currencies, and capital flows give the real, deeper story.