The performance of the Japan’s 40-year government bonds soared to 4.344% this Monday, May 18, 2026.
This level represents the highest since its launch in 2007 and a record for any maturity of Japanese sovereign debt in more than three decades.
At the same time as this rise, the price of bitcoin (BTC) fell almost 2% in 24 hours. The digital currency fell from $81,000 to $76,600. With this movement, bitcoin returned to levels it had not recorded since May 1. In the last week it accumulates a drop of close to 7%.
This reaction is explained by the behavior of investors towards Japanese bonds. Government debt securities now offer a higher return with low risk. By becoming more attractive, They raise capital that could normally be allocated to volatile assets like bitcoin, which reduces its demand and pushes its price down.
Specialists such as Mitul Kotecha, head of macroeconomic strategy for currencies and emerging markets at Barclays, explain the context behind this rally in Japanese bonds. “There are many factors that influence bond markets,” statedbut highlighted geopolitical tensions between Iran and the United States as one of the main drivers of the rise in yields.
And what does one thing have to do with the other? The explanation is that The war in Iran skyrocketed global oil prices, unleashing strong inflation in Japan due to its extreme dependence on external energy.
Fearing that this persistent inflation will erode the value of money in the coming decades, large investors massively sold Japanese sovereign debt to protect themselves; This drop in security prices automatically pushed the 40-year bond yield to its all-time high.
“The summit between Trump and Xi did not yield any progress regarding the Strait of Hormuz, which would have alleviated pressure on oil prices,” Kotecha added. In addition, he warned that “there is a fear that we are at a turning point in the energy markets.”
Investors are now watching to see if talks between leaders of the United States, Iran and other nations involved in the negotiations manage to ease tensions and stabilize energy markets. Meanwhile, The historic rally in Japanese bonds continues to undermine the price of bitcoin.