In a recent QuickTake post on CryptoQuant, XWIN Research Japan explains how rising Japanese bond yields are currently affecting Bitcoin’s price action.
Japanese government bonds decline amid macroeconomic pressures
According to XWIN Research Japansurrender Japanese government bonds JGB has continued to rise due to continued inflation pressure, expectations of policy normalization, and concerns about fiscal expansion. Bond prices have also fallen in response, meaning banks and other domestic Japanese institutions are suffering huge unrealized losses.
With approximately 390 trillion yen (approximately $2.6 trillion) currently invested in JGBs, even a slight 1% increase in returns could push tens of trillions of yen worth of holdings into negative territory, amplifying financial burden across the system.
As expected, this scenario would put significant pressure on institutional investors to adjust their balance sheets. Risky assets, including Bitcoin, are easy targets for such “rebalancing” activities, according to a cryptocurrency research group. Given that Japan maintains a large external investment portfolio, liquidity withdrawals have a signal impact on the market.
Therefore, these chains of rising yields that ultimately lead to liquidity contraction often have a direct impact on Bitcoin. In particular, historical patterns show that low interest rate environments often support price growth or expansion, while rising interest rates typically hinder the growth of flagship cryptocurrencies.
Stablecoin supply surges to record levels
Additionally, XWIN Research Japan reports a significant increase in available stablecoin supply, citing the All Stablecoins (ER20): Total Supply Index. According to research analysts, this suggests that there is indeed capital waiting to be tapped on the side. However, this available liquidity is clearly not being introduced into risk markets.
So it becomes clear that Bitcoin is currently in a classic environment where liquidity exists but has not yet been distributed. Interestingly, exchange flows show that approximately $9.6 billion has exited the Bitcoin market in early 2026, with capital clearly diverted into stablecoins. These two conditions also contribute to weakening demand. This is because rising interest rates are already reducing demand.
Therefore, the Bitcoin price may continue to suffer in the long term as institutional demand may remain weak until macroeconomic conditions improve. As of this writing, the value of Bitcoin is $67,391, reflecting a positive daily change of 0.76%. Over a larger time frame, the top cryptocurrency reports weekly gains of 1.34% and monthly losses of 5.47%. With a market capitalization of $1.34 trillion, Bitcoin remains the world’s 13th largest asset and largest digital asset.
Featured image from iStock, chart from Tradingview
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