The financial landscape is being rocked by rising yields on Japanese government bonds, which have hit their highest levels in over two decades. The situation is further complicated by the recent tariff-induced volatility that continues to affect global markets, including Bitcoin (BTC), which is still grappling with the aftermath.

On Tuesday, the yield on Japan’s 30-year government bonds surged to 2.88%, its highest level since 2004, marking a dramatic increase of almost 60 basis points in just a week. The spread between the 30-year and five-year bonds has also widened to levels unseen for nearly 20 years, signaling growing investor concern. Meanwhile, the 10-year yield climbed 30 basis points to 1.37%, but still remains well below the recent peak of 1.59%.

This sudden shift in the Japanese bond market is raising concerns among global investors. Japan has long been one of the largest international holders of U.S. Treasuries, with holdings amounting to $1.079 trillion. The country’s low bond yields have provided a stabilizing influence on global financial markets, encouraging risk-taking behavior.

However, the recent rise in long-term bond yields could prompt Japanese investors to repatriate capital, selling off foreign bonds and unwinding yen-funded carry trades. This shift could trigger increased volatility in the U.S. Treasury market and exert upward pressure on the yen, which may add to risk aversion in global markets.

Garry Evans, Chief Strategist for Global Asset Allocation at BCA Research, warned of the potential impact. “If Japan begins pulling capital back home, it could create significant turbulence in global markets,” he said in an interview with CNBC. “Japan holds the largest international investment position in the world, and any shift in that could have far-reaching consequences.”

For Bitcoin, the rising bond yields come at a time when the cryptocurrency has shown some resilience. While the broader market has been roiled by tariffs and other macroeconomic factors, BTC has managed to perform better than traditional equities like the Nasdaq and S&P 500. However, Bitcoin has still been on a downward trajectory since early February, likely reflecting ongoing concerns about the trade war and broader economic instability.

As markets continue to navigate the complexities of rising Japanese bond yields, tariffs, and other economic uncertainties, Bitcoin’s ability to maintain its recent resilience will be closely watched by traders and investors alike.