Analyst: Silent Liquidity Crisis in Japan Could Trigger Next Crypto Crash

Bitcoin’s next downturn may not begin within the crypto markets but from tightening liquidity conditions in Japan. This is according to analyst Ted Pillows, who argues that rising Japanese bond yields could act as a potential trigger that could ripple through global markets and weigh adversely on digital assets.

Key takeaways

Quick scan — what you need to know:

• Bitcoin’s next downturn may not begin within the crypto markets but from tightening liquidity conditions in Japan.
• This is according to analyst Ted Pillows, who argues that rising Japanese bond yields could act as a potential trigger that could ripple through global markets and weigh adversely on digital assets.
• Japanese Yields and Global Liquidity Pressures Pillows wrote on X on March 30 that Japan’s long-standing low-interest-rate environment is beginning to change, and that higher long-term bond…
• He pointed out that rising borrowing costs are causing the value of existing bonds to drop, which in turn is leaving banks and pension funds exposed to losses.

Background

What led here, in plain terms:

• “These losses reduce confidence and make institutions more cautious with money,” he added.
• The increased caution and lack of confidence often lead to a process the analyst called “liquidity tightening,” where less money flows through the system.
• Historically, Japan has played a huge role in global liquidity through the so-called yen carry trade, which involves investors borrowing in yen, which is much cheaper, and then putting that money…
• But according to Pillows, the strategy is becoming less attractive with yield going up, making investors pull back their funds.

Why it matters

Why readers and decision-makers should care:

• Furthermore, the Exchange Whale Ratio, which measures large inflows to trading platforms relative to total exchange inflows, has been steadily climbing in the last three months, with its 30-day…
• In the past, high readings usually came right before selling pressure hit the market.
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