XRP and other risk assets may face renewed downside pressure after Japan’s 10-year government bond yield surged to its highest level since the 2008 financial crisis. This significant upward move in global bond markets reflects rising investor worries that could spread across international financial systems.

Japan’s 10-year yield climbed past 1.61%, marking a 17-year peak. The surge follows a disappointing 20-year bond auction on Tuesday, signaling that investors are concerned about Japan’s expanding fiscal deficit, increasing government spending, and recent tax reductions. These concerns have resulted in lowered appetite for longer-term debt offerings.

Yields on Japan’s longer-term bonds rose sharply, mirroring levels observed in the previous month. According to data from TradingView, the 20-year government bond yield rose to 2.64%, while the 30-year reached 3.19%. Analysts warn that this upswing in yields could extend into the U.S. Treasury markets, potentially tightening overall global financial conditions.

Why Rising Bond Yields Matter for XRP and Risk Assets

Traditionally, low yields across advanced economies—heavily influenced over the past decade by the Bank of Japan’s ultra-loose monetary stance—have encouraged investment into higher-risk assets, including cryptocurrencies and equities. With yields now climbing, those riskier alternatives may lose appeal as safer government-backed bonds offer more competitive returns.

Given XRP’s sensitivity to macroeconomic conditions and momentum from institutional investment trends, rising bond yields can reduce liquidity flows into the crypto market. This may prompt caution among traders and investors balancing yield-based returns with speculative assets.

Increase in Japan’s government bond yields can send ripples across global markets, impacting risk assets like XRP.

Calls for Rate Hike Intensify Pressure

Adding to the economic tension is a public push from political leaders for a stronger response from Japan’s central bank. Taro Kono, a senior lawmaker from the ruling party, expressed his concerns in an interview with Reuters, urging the Bank of Japan (BOJ) to hike interest rates. Kono argued that ending fiscal indiscipline and strengthening the fragile yen are critical measures to curb inflation and stabilize Japan’s economy.

Mr. Kono’s remarks follow comments from U.S. Treasury Secretary Scott Bessent, who asked the BOJ to raise rates and provide support for the Japanese yen against other major currencies. These joint sentiments place additional pressure on the central bank to act decisively, especially as inflation undermines consumer purchasing power and market stability.

After ending its long-standing quantitative easing policy last year, the BOJ implemented its first rate hike in over a decade, setting short-term rates at 0.5% this January. However, the central bank has since maintained those rates, choosing to hold rather than quickly adjust policy in the wake of global tightening trends.

Implications for XRP’s Market Sentiment

The macroeconomic shift caused by Japan’s rising bond yields and potential interest rate adjustments may deepen uncertainty among crypto investors. XRP could see volatility increase as traders reposition portfolios amid expectations for tighter financial conditions globally.

While XRP has historically weathered market turbulence, sustained rises in bond yields—particularly from a major economy like Japan—could force important capital allocations away from digital assets and back into more traditional havens. It reinforces the link between legacy markets and the decentralized finance world, underscoring how deeply interconnected global markets have become.

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Given these dynamics, XRP investors should watch interest rate policy announcements from central banks, especially the BOJ and the U.S. Federal Reserve, for potential signals of shifting demand and liquidity.