A violent tremor in Japan’s government bond market triggered a worldwide sell-off on Tuesday, crushing risk assets from stocks to cryptocurrencies as a crucial source of cheap global funding threatened to dry up.
Key numbers:
- Bitcoin: Fell over 3.3% to $89,300.
- Gold: Soared 4% to a record $4,866/oz.
- S&P 500 & Nikkei: Both slumped more than 2.5%.
- Japanese bond move: Described by U.S. Treasury Secretary Scott Bessent as a “six standard deviation” event—an extremely rare market quake.
Why it matters: For years, Japan’s ultra-low rates fed cheap cash into global markets, boosting investments like tech stocks and crypto. The sudden bond crash signals that era may be ending, tightening liquidity worldwide.
Analysts say the Bank of Japan now faces a painful choice: tighten policy and squeeze global money flows, or let its bond market unravel. “Neither option is great for tech-heavy U.S. equity markets,” said Quinn Thompson of Lekker Capital.
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While bitcoin fell with other risk assets, some experts noted its long-term thesis as a hedge against currency debasement could strengthen if the BOJ is forced to print money to stabilize its bonds.
The turmoil underscores how interconnected global markets have become—and how a shock in Tokyo can swiftly hit portfolios everywhere.
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