Will the shift in the Bank of Japan's policy play people for suckers and blow up global leverage?

Recently, there's an interesting phenomenon: English Twitter is frantically discussing the surge in Japanese bond yields, while the Chinese community seems to be oblivious to it. This issue actually pertains to global Liquidity, indirectly affecting the crypto world.

The Logic of Carry Trading

For the past 30 years, Japan has maintained near-zero interest rates. This has given global capital an arbitrage opportunity: borrowing yen (at almost zero cost), exchanging it for dollars or other currencies, and then investing in US stocks, US bonds, real estate, and even crypto assets. This is known as carry trade. Scale? In the trillions.

The turning point has appeared.

Since November 2025, the yield on Japanese long-term government bonds has seen a significant increase:

• The 20-year Treasury yield approaches 2.8%
• 40-year Treasury bond surged to 3.7%

This is not a minor adjustment, but a release of thirty years of suppression.

Chain Reaction

When the cost of yen borrowing rises sharply:

Direct Impact: The interest rate differential from carry trades is compressed, and the original risk-free return has disappeared.

Exchange Rate Aspect: The appreciation of the yen increases the cost of repaying debts in yen, putting pressure on leveraged positions.

Liquidity Shock: A large amount of funds needs to flow back to Japan for debt repayment, and global risk assets may face a wave of redemptions.

Insights into the crypto world

Macroeconomic liquidity is an invisible underlying driving force. When global carry trades significantly shrink, various assets that were previously buoyed by liquidity will feel pressure. The recent fluctuations in BTC and ETH may not just be a matter of sentiment; there is also this macro background behind it.

Simply put: it's not that you can't buy at the bottom, but rather that the global liquidity situation is quietly changing.