Japan in liquidity crisis and investors flock to Bitcoin

• Japanese liquidity crisis boosts interest in Bitcoin
• Metaplanet boosts strategy with leading cryptocurrency
• Japanese investors seek refuge in Cardano

Japan’s government bond market is facing its worst liquidity crunch since 2008, raising concerns among economists and global investors. Yields on long-term bonds have risen sharply in recent weeks, with the 30-year yield hitting 3,20%, up 100 basis points. Meanwhile, 40-year bonds have plunged, wiping out more than $500 billion in market value.

Analysts warn that the current environment in Japan is reminiscent of conditions seen at the height of the Lehman Brothers crisis. According to Financelot, “bond market liquidity has fallen to levels seen during the 2008 Lehman Brothers crisis.”

🇯🇵 Japan's bond market liquidity has currently dropped to 2008 Lehman crisis levels.

Are we about to experience another financial crisis? https://t.co/g0CDnPkX8C pic.twitter.com/SBM460gULa

— Financelot (@FinanceLancelot) May 26, 2025

The turmoil is rooted in changes to the Bank of Japan’s monetary policy. After years of aggressive bond purchases, the bank has scaled back its interventions, flooding the market with bonds and pushing up yields. Even with the slowdown, the bank still holds $4,1 trillion in government debt, more than half of the outstanding bonds.

This structural mismatch comes as Japan faces a surge in its total debt to $7,8 trillion, with a record debt-to-GDP ratio of 260%. In the first quarter of 2025, real GDP fell by 0,7%, negatively surprising forecasts. Inflation is also not easing, rising to 3,6% in April, while real wages fell by 2,1% year-on-year.

In this environment, digital assets such as Bitcoin have increasingly been considered as an alternative by Japanese investors. One example is Metaplanet, whose shares rose 15,55% on May 27, reflecting increased confidence in its Bitcoin reserve policy.

Furthermore, Cardano (ADA) is also attracting attention in the local market. The growing demand for the ADA/JPY pair reveals the interest of retail investors in alternative options to traditional investment structures. This movement suggests that, amid economic instability, cryptocurrencies are gaining relevance as a form of capital protection in Japan.