BitMEX co-founder Arthur Hayes argues that a weakening Japanese yen alongside rising Japanese government bond (JGB) yields could prompt Japanese investors to sell U.S. Treasuries, a shift that may reverberate across global markets and crypto.
Hayes’ macro view
According to Hayes, sustained yen weakness and higher domestic yields reduce the appeal of holding U.S. Treasuries for Japanese institutions. When the yen falls, currency-hedging costs typically rise for foreign bond buyers, compressing net returns. At the same time, higher JGB yields provide a more competitive domestic alternative, potentially encouraging investors to rotate out of U.S. debt.
Why Treasuries matter
Japan is among the largest foreign holders of U.S. Treasuries, making its investment decisions a key factor in global bond liquidity. If Japanese investors trim Treasury exposure, U.S. yields could face upward pressure and dollar funding conditions could tighten, increasing volatility across risk assets.
Implications for Bitcoin
Hayes contends that any market stress stemming from such shifts could draw policy responses aimed at stabilizing bond markets and liquidity. Historically, periods of looser financial conditions have supported risk assets, including Bitcoin. While the path is uncertain, crypto markets are closely watching how foreign holdings of Treasuries, currency moves, and bond yields interact.