In its latest assessment, cryptocurrency asset analysis company Delphi Digital pointed to a striking negative correlation between Bitcoin and Japan’s 10-year government bonds.
According to the analysis, tensions in the Japanese bond market are putting pressure on Bitcoin prices, but a potential central bank intervention could reverse this trend.
A Delphi Digital report notes that while Bitcoin prices are trading sideways, gold continues to rise, arguing that the primary reason for this could be Japanese government bonds. Normally, rising bond yields increase the opportunity cost of holding non-yielding assets, putting pressure on gold. However, the current situation, where both gold and yields are rising simultaneously, suggests the market is pricing in policy pressures and balance sheet risks rather than economic growth.
According to the data in the report, Japan’s 10-year government bond yield has risen approximately 3.65 standard deviations above its long-term average. It is noted that Japanese banks structurally hold a high percentage of long-term bonds and are heavily exposed to them, both as assets and collateral. This situation creates vulnerability for the financial system.
In the current environment, it is stated that much of this pressure is absorbed by gold, while Bitcoin exhibits a negative correlation with Japanese 10-year bonds and has performed relatively weakly with rising yields. According to Delphi Digital, if the Bank of Japan takes a step to stabilize the bond market, the risk premium on gold may decrease and Bitcoin may find room to recover.
*This is not investment advice.
