Japan Faces Economic Turmoil As Crypto Markets Crash

Highlights

Japan's 40-year bond yield hit its highest level in over 20 years.
PM Shigeru Ishiba warned that the country is experiencing a financial crisis “worse than Greece".
But analysts believe that the crypto market is poised for a bull run in the long run, despite short-term volatility.

The recent economic indicators have sent shockwaves through Japan’s financial landscape, with the country experiencing severe economic turmoil. Reportedly, Japan’s 40-year bond yield has surged to its highest level in over 20 years, reflecting growing concerns about the country’s fiscal stability. Prime Minister Shigeru Ishiba warned that the country is experiencing a financial crisis “worse than Greece.”

Moreover, Japan’s economy contracted by 0.7%, marking its first quarterly decline in a year. The Japanese stock exchange Nikkei 225 also witnessed a sharp sell-off amid economic struggles and the Moody’s downgrading of the US credit rating. These developments are poised to have profound implications on the crypto market as well.

After a strong bull run on Sunday pushed Bitcoin (BTC) over $107k, the crypto markets are witnessing a crash today with BTC, ETH, and XRP dropping 3.2%, 4%, and 5%, respectively, in the past 24 hours. While this crash is not directly due to Japan’s economic woes, it does have bearings on the future course of the crypto market from here on.

Japan Faces Severe Economic Turmoil: How Will It Impact the Crypto Market?

As revealed by crypto commentator Kobeissi Letter, Japan is currently experiencing a severe financial crisis, with its 40-year bond yield hitting its highest level in over 20 years. This yield spike highlights the growing concerns over the country’s economy. The economy is facing headwinds as its GDP continues to decline in consecutive quarters.

Over the past week, the crypto market has seen a rollercoaster ride, with top cryptocurrencies facing high volatility. As per reports, Japan’s economic crisis is mostly driven by the crypto market crash. Despite this, the yield hike is poised to push crypto prices up.

Notably, the traditional safe-haven assets like Japanese bonds are losing their appeal. This is due to skyrocketing yields and dwindling confidence in debt sustainability. Thus, investors will turn to alternative assets like Bitcoin and Ethereum, reassessing their risk tolerance.

In addition, the Nikkei 225 index plunged 3.2% on May 19, 2025, at the Tokyo Stock Exchange close, signaling increased market anxiety. While shifting capital flows may present opportunities, they also create a high-volatility environment in the crypto market. The uncertainty may drive capital away from risky assets like crypto.

Kobeissi Letter also highlighted the US economy’s resilience under President Donald Trump’s proactive measures and financial policies. For instance, the US is adopting a strategic Bitcoin reserve for economic stability and financial leadership.

As of now, the crypto market is trading in the red. The total market cap is down by 1.16%, at $3.26 trillion. Driven by Japan’s economic turmoil, Bitcoin, valued at $103,158 now, had surged to a notable high of $106,566. At the same time, Ethereum rose to $2,579, only to drop to $2,409.

Nonetheless, analysts and market experts believe the crypto market is poised for a bull run in the long run. With Bitcoin approaching an all-time high and Ethereum potentially leading an altcoin rally, the current market dynamics suggest a bullish trend.

US-China Trade War Still In The Background

Amid Japan’s economic turmoil, the US-China trade war also threatens to shake up the crypto market. China released a statement on the US adjusting chip export controls, claiming that the US “seriously undermined the consensus reached at the Geneva talks.”

As CoinGape reported, a US-China trade deal followed a two-day negotiation in Switzerland. China has asked the US to correct its wrongdoings and has vowed to take measures if they don’t.

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Nynu V Jamal

Nynu V Jamal is a Senior Journalist at CoinGape. She boasts more than 3 years of experience in content writing, with expertise in crypto and blockchain. She has contributed to platforms like CoinEdition and CryptoTale, demonstrating her proficiency in navigating the dynamic crypto landscape. Beyond her journalistic pursuits, Nynu is a literary enthusiast, having served as an Assistant Professor of English Language and Literature. She is a Master's degree holder in English Literature and a UGC NET qualifier. Her academic background has enabled her to publish research papers on literature, while also nurturing her creative side as a published poet. Her creative side extends to music, crafts, and art, which she actively explores. Her unique blend of analytical and creative skills allows her to craft engaging stories that captivate audiences. Stay updated with Nynu on LinkedIn

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