Japanese government bond yields peaked at 3.5%, triggering a butterfly effect, and Bitcoin soared to become the new favorite of global sovereign risk hedging
By White55, Mars Finance
May20, 2025 -- Japan's 40-year government bond yield broke through 3.5%, hitting a record high on electronic screens on the Tokyo bond trading floor with a set of dazzling red numbers. That figure was 0.25 percent seven years ago and 1.3 percent two years ago, but now it's rocketing.
Around the same time, the price of Bitcoin on global cryptocurrency exchanges broke through $112,000, setting an all-time record.
Thesafest safe-haven assets in the traditional financial system and the most controversial new assets in this moment form a dramatic mirror image: the surge in Treasury yields reveals a shaking foundation for sovereign credit, while Bitcoin's surge underscores its value as a hedging tool.
Japanese government bonds: The Japanese government bond market, where the black swan took off
, is experiencing an epic crisis of confidence. In May 2025, Japan's 40-year government bond yield broke through a record high of 3.5%, and the 30-year government bond yield also surged to its highest level since 2004. Bond yields are inversely proportional to prices, and surging yields mean bond prices have plummeted, and investors are voting with their feet to abandon what was once considered the safest debt market in the world.
At the heart of Japan's debt problem lies in the fundamental imbalance between the size of its debt and its ability to repay its debts. Japan's debt-to-GDP ratio has exceeded 250%, well above Germany's 62%, while maintaining similar bond yields.