The recent all-time high of Bitcoin may be linked to the current issues in the Japanese bond market, which possibly indicates the growing recognition of BTC as a hedge against instability in the traditional financial system.
The price of Bitcoin $BTC rose to a new all-time high of USD 112,000 on May 22, before retreating to trade above USD 109,700 at the time of writing this article on May 26, according to data from Cointelegraph.
Although some attributed the surge to geopolitical events, including U.S. President Donald Trump's announcement of ceasefire talks between Russia and Ukraine on May 19, macroeconomic factors appear to be playing a more significant role, according to market analysts.
The yield on 30-year Japanese bonds reached a new all-time high of 3.185% on May 20, 2025, before retreating to 3.115% on May 23, according to data from TradingView.
Public debt is often considered a safe-haven asset. But when yields rise sharply, it is usually a signal of investors' concerns about fiscal sustainability and repayment risk. Japan's debt-to-GDP ratio exceeds 250%, compared to Germany's 62%, yet both countries had 30-year bond yields close to 3.1% on May 21, The Kobeissi Letter noted.
"As yields are rising, sustainability becomes an issue, which means credit risk increases, which means yields increase even further," Dragosch said. "And so it ends up in this kind of doom loop of fiscal debt."
Dragosch said that the increasing volatility in the Japanese bond market could be driving some institutional investors to reconsider Bitcoin's role as a hedge against sovereign default risk.
