Japan's Bond Yields Rise to 1.98%: Impact on Gold, Silver, and Bitcoin

In December 2025, Japan's 10-year government bond yields soared to 1.98%, marking the highest level seen since the 1990s. This surge comes just as the markets prepared for the Bank of Japan's (BOJ) policy meeting on December 19.

Key Takeaways:

Japan's bond yields have reached 1.98%, the highest since the 1990s.
Precious metals like gold and silver have surged, while Bitcoin faces declining prices due to forced liquidations.
The BOJ's recent rate changes have global implications, signaling increasing sovereign risk.
Investors view gold and silver as hedges against macroeconomic risks, contrasting with Bitcoin's situation amid tightening liquidity.

This increase has spurred a worldwide rally in precious metals, with gold and silver prices rising by 135% and 175%, respectively, since the start of 2023. In contrast, Bitcoin is under significant pressure, especially with heightened selling across Asian exchanges, showcasing differing market reactions to Japan's monetary policy changes.

Japan’s Bond Yields Surge

For many years, Japan held nearly zero interest rates, facilitating global liquidity through the yen carry trade. Investors borrowed yen at low rates to invest in higher-yielding assets worldwide, which effectively spread Japan's ultra-low interest rates globally.

An anticipated 25-basis-point increase, taking the rate to 0.75%, may seem small, but the speed of this change is critical.

According to Guilherme Tavares, CEO of i3 Invest, “With the carry trade at risk, we cannot predict when the real effects will emerge, but this ongoing shift will likely drain liquidity from markets, causing possible ripple effects like margin calls and other forced sales.”

Experts view the BOJ's action as more significant than a simple domestic adjustment.

Simon Hou-Vangsaae Reseke noted that “When Japan’s yields change, global capital takes notice. Gold and silver are not merely reacting to inflation news; they are pricing in sovereign balance sheet risks. Japan is now the central player."

Rally in Gold and Silver Prices amid Rising Risk

Precious metals have been closely mirroring Japanese government bond yields. Data from Global Market Investor indicates that gold and silver prices are closely aligned with these yields, suggesting that investors are using precious metals as primary hedges against rising government debt costs.

EndGame Macro analyst explained, “It’s not the yield alone that matters, but what it signifies — increasing sovereign risk, tighter global liquidity, and uncertainty about currency credibility. Gold serves as a protective asset, while silver tends to follow with greater volatility.”

The silver market is showing trends of speculative behavior, with the China Silver Futures Fund recently trading 12% above the physical silver it represents, indicating that demand for leveraged exposure is outstripping the actual physical asset.

⚠️ Silver market speculation is evident:

The China Silver Futures Fund traded at +12% above the actual silver value, indicating investors are acquiring the fund much faster than the underlying silver is increasing, reflecting a speculative trend.

Investors are deeming gold and silver as hedges against wide-ranging macroeconomic risks, beyond just inflation concerns.

Bitcoin Under Pressure as Carry Trades Reverse

Conversely, Bitcoin is feeling the weight of Japan's tightening liquidity.

“Exchanges in Asia are seeing persistent selling. Miner reserves are depleting — this is forced selling, not voluntary… Long-term holders in Asia seem to be distributing their assets… Prices likely remain under pressure until this forced supply is exhausted,” noted CryptoRus, referencing findings from XWIN Research Japan.

While U.S. institutions are still buying, indicated by a positive Coinbase Premium, forced liquidations in Asia and an 8% drop in Bitcoin’s hashrate have contributed to downward pressure on prices.

Historically, shifts in BOJ rates have coincided with significant declines in Bitcoin value, leading traders to monitor for possible further downturns, with an eye on the $70,000 mark.

Japan's Bank of Japan may be Bitcoin's strongest adversary.

Japan holds the largest amount of U.S. debt, and Bitcoin typically experiences declines with each rate hike:

March 2024: -23%
July 2024: -30%
January 2025: -31%

Next hike? December 19. Potential outcomes? Remain to be seen.

If this pattern continues, a target price of $70K may be in play.

The contrasting responses of precious metals and Bitcoin underscore the disparities in risk positioning. While gold and silver draw safe-haven investments amid escalating sovereign risk, Bitcoin is facing pressures from forced liquidations.

Analysts remain optimistic that potential future rate cuts by the Federal Reserve could mitigate the BOJ’s impacts, but the pace of these policy changes will be essential.