Crypto markets experienced a sharp decline after Japan's 10-year government bond yield surged to its highest level since 2008. This movement triggered a wave of global risk reduction and one of the largest liquidation events in weeks.
This movement eliminated billions of dollars in digital asset value, highlighting how much the crypto sector is still exposed to changes in macroeconomic liquidity outside its own ecosystem.
Increase in Yields in Japan: the Yen Carry Trade Unravels and Crypto Feels the First Impact
The total market value of crypto has fallen approximately 5% in the last 24 hours, with Bitcoin and Ethereum prices dropping more than 5%.
According to Coinglass, over 217,000 traders were liquidated during the drop, resulting in a loss of nearly $640 million in positions.
This illustrates how quickly leverage can evaporate when global rates move drastically.
The catalyst came from Tokyo, where the yield on Japan's 10-year government bonds rose to 1.84%, a level not seen since April 2008.
BREAKING: Japan's 10Y Government Bond Yield surges to 1.84%, its highest level since April 2008.
This chart is concerning to say the least. pic.twitter.com/fBkMMyBnqy
— The Kobeissi Letter (@KobeissiLetter) December 1, 2025
The predominant perception is that the increase in yield is more than just a technical movement. It signals that the yen's carry trade, which lasted for decades, may finally be unwinding.
For nearly 30 years, Japan's near-zero interest rates allowed investors to borrow cheaply in yen and allocate capital into higher-yielding assets abroad. These paths include:
U.S. Treasury bonds
European bonds
Risk assets like stocks and crypto.
The rise in yields in Japan threatens to reverse this flow, bringing capital back to the country and tightening liquidity globally.
"For 30 years, the yen's carry trade subsidized global arrogance — zero rates… free leverage… fake growth… entire economies built on borrowed time and borrowed money. Now Japan has flipped the switch. Rates have risen. The yen has strengthened. And the world's favorite ATM has just become a debt collector," wrote data scientist ViPiN on X.
When Japanese yields rise, global liquidity contracts, leading to a repricing in the market. This likely explains why Silver (XAG) has yet to experience its Supercycle, and Bitcoin is dealing with end-of-cycle volatility.
"Japan is draining liquidity, Bitcoin is absorbing the shock, and Silver is preparing for a once-in-a-lifetime repricing," said an analyst in a post.
Crypto sell-off is not local but rather a macro liquidity crisis
Shanaka Anslem, a popular ideologist and user on X, described the advance of JGB as 'the chart that should terrify every portfolio manager.'
THE CHART THAT SHOULD TERRIFY EVERY PORTFOLIO MANAGER ON EARTH
Japan’s 10 Year Government Bond Yield just hit 1.84%.
The highest since April 2008.
Up 11.19% in a single session.
You need to understand what this means.
For three decades, Japan was the anchor. Zero rates.… https://t.co/1mpX0HuPdp
— Shanaka Anslem Perera ⚡ (@shanaka86) December 1, 2025
The strategist, who reportedly witnessed infrastructure collapses, currency shocks, and state-level crises, cited:
Inflation above 3%,
Higher wage growth, and
A Bank of Japan that is increasingly losing its ability to suppress yields.
These forces are pushing Japan toward a structural shift, moving away from the ultra-loose monetary regime that has defined global markets for decades.
"When Japan raises rates, it sucks liquidity out of the global system. The 'fuel' that drove the stock market rally is being drained. We can expect volatility in high-growth stocks as this era of 'cheap money' ends," added another investor in a post.
The timing of the move is particularly significant. The Federal Reserve has just ended its quantitative tightening program, the U.S. is facing a record issuance of Treasury bonds, and interest payments on U.S. debt have surpassed the $1 trillion annual mark.
Meanwhile, China, historically one of the largest foreign buyers of U.S. Treasury bonds, has slowed its accumulation. With Japan now under pressure to repatriate capital, two of the most significant external sources of U.S. funding are simultaneously retreating.
"When the world's creditor nations stop funding the world's debtor nations at artificially suppressed rates, the entire post-2008 financial architecture must be reevaluated. Every duration bet. Every leveraged position. Every assumption about perpetually falling rates. This is not a Japanese story. This is a global story. The 30-year bull market in bonds has ended. Most still don't realize this," said Shanaka.
Crypto, as one of the high volatility segments of global markets, tends to react first when liquidity tightens. The scale of the liquidations suggests that leveraged investors were caught off guard by the volatility in bonds, forcing rapid liquidations of positions in key assets.
Instead of a specific crypto collapse, the sell-off reflects a broad reassessment of duration, leverage, and risk as global bond markets adjust.
Therefore, traders should likely watch the Japanese bond market as closely as they follow Bitcoin charts. If JGB yields continue to rise, it may tighten global liquidity by the end of the year.
The article 'Japan Bonds Trigger $640 Million Liquidations as JGB Hits 17-Year High' was first seen on BeInCrypto Brazil.
