Japan's 2-Year Yield Hits 31-Year High - Why the Yen Carry Trade Matters for Bitcoin

Japan's two-year government bond yield climbed to 1.746% on Monday, its highest level in more than 31 years. The move raises the cost of the yen carry trade that has helped fund global risk assets, including Bitcoin (BTC).

Two-year yields track what traders expect from the Bank of Japan (BOJ). Swap markets now price roughly 88% odds of a rate increase in September.

Japan Spent $97 Billion And The Yen Still Fell

The BOJ lifted its policy rate to 1% in June, the highest since 1995. Longer maturities followed. The 10-year Japanese government bond (JGB) yield now sits near 2.93%.

Higher rates would normally support a currency. Instead, the yen weakened. It traded at 160.16 per dollar on Friday and touched 160.20 again on Monday.

Tokyo deployed 15.4 trillion yen, close to $97 billion, between July 30 and August 26. That included a rare joint intervention with the United States on July 31. However, the currency has already surrendered more than half of those gains.

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