How will it affect the price of Bitcoin?
In particular, BTC prices will come under pressure as markets brace for continued increases in long-term yields due to economic deficits in Japan.
The gap between longer-dated and shorter-dated US bonds has risen to record highs from 2021, signaling a potential 2026 crash for Bitcoin (BTC).
Main Receptors:
A widening gap means that long-term yields are rising, which can put pressure on Bitcoin.
A selloff in Japanese long-term bonds is pushing the move and pushing U.S. yields higher.
A widening yield gap could hurt stocks (and Bitcoin).
If an assessment by David Roberts, head of fixed income at Nedgroup Investments, is to be believed, the outlook for the Bitcoin market appears to be bullish.
Roberts told Bloomberg that stocks will suffer from “continued high yields.” The pressure is concentrated on long-term products, especially in Japan, he said.
This week, Japan's 30-year bond yield rose to 3.92%, widening the gap with the two-year bond yield by 220 bps–325 bps.
Lauren van Biljoen, senior portfolio manager at Allspring Global Investments, said it could rise by another 75 bps–100 bps, citing Japanese Prime Minister Sanai Takaichi's election pledge to increase spending.
The U.S. 30-year yield tracks its Japanese counterpart closely, indicating that it will rise along with it in the coming weeks or months.
High yields typically reduce the risk of holding non-yielding assets such as stocks, which increases the likelihood that Bitcoin, a “high-beta” risk asset, will decline along with it.
Related: Spot Bitcoin, Ether ETFs See Higher Costs As ‘Institutional Caution' Grows
The review aligns with a so-called four-year cycle that predicts the price of BTC to fall in the $40,000-$50,000 range by the end of 2026.
Can BTC Get Gold's “Historical Alpha Grab”?
According to Bloomberg Intelligence strategist Mike Magglone, gold's performance is adding another headwind to Bitcoin.
In Friday's post, he argued that gold's “historic alpha grab” is pulling capital toward the traditional inflation hedge as higher long-term Treasury yields also compete for liquidity.
In that setup, Bitcoin faces a serious hurdle to regaining key psychological levels above $100,000, especially if investors continue to favor low-volatility stocks with higher beta risk assets.
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