Japan sold US bonds crazily in April. Arthur Hayes: The rise of the yen will drive a sharp rise in Bitcoin

According to data from the Japanese Ministry of Finance, private institutions, including the Bank of Japan and retirement funds, sold $21.1 billion in long-term foreign bonds in two weeks of April, with many analysts believing a large portion could be U.S. Treasury or U.S. agency bonds. Is Japan's massive sell-off of U.S. debt for fund rebalancing? Or is the Japanese yen carry trade liquidation resurging? BitMEX founder Arthur Hayes happily stated that this will drive a significant surge in Bitcoin.

Japan's Massive Sell-off of U.S. Debt in April

According to the Financial Times, in the week ending April 4, private institutions, including banks and retirement funds, sold $17.5 billion in long-term foreign bonds, and sold an additional $3.6 billion in the following seven days. This is one of the largest capital outflows in two weeks since 2005.

Japan's public and private sectors hold $1.1 trillion in U.S. Treasury bonds, making it the largest holder of U.S. government debt globally, and its transactions are closely monitored as a proxy for buying or selling U.S. government debt.

Previously, when U.S. bond yields surged, there were rumors of China selling U.S. debt to pressure the U.S., but no clear data could substantiate this.

(U.S. Bond Yields Surge, Rumors of China Selling U.S. Debt, Is the Fed Ready for Emergency Rescue?)

Fund Rebalancing?

Tomoaki Shishido, a senior rate strategist at Nomura Bank in Japan, stated that a large portion of the bonds sold by Japan might be U.S. Treasury or U.S. agency bonds (mortgage-backed securities guaranteed by the U.S. government). Some foreign bond sales might be due to Japanese retirement funds rebalancing or banks and life insurance companies reducing interest rate risks.

In fact, with traditional funds typically maintaining a 60/40 stock-to-bond allocation, fund managers are inevitably forced to rebalance as stock market values have dropped more rapidly than bonds. The 60/40 ratio may have shifted to 50/50, compelling managers to sell bonds and buy stocks to restore the original allocation. This is not unique to Japan but also affects funds in the U.S. and other countries.

Japanese Yen Carry Trade Resurging?

In carry trade, investors borrow funds from low-yield markets to bet on high-yield markets. Due to relatively low yields, Japan has been a common "financing" market for such trades, which is also one reason for the long-term depreciation of the yen.

Analysts suggest that some of the sales by Japanese private investors might result from the Bank of Japan abandoning carry trade strategies.

The USD/JPY recently dropped below 140, approaching last year's carry trade liquidation low point.

Arthur Hayes: Japanese Yen Appreciation Will Drive Bitcoin Surge

BitMEX founder Arthur Hayes recently posted on X that the rapid appreciation of the Japanese yen due to liquidation of U.S. stock and bond positions will drive a significant Bitcoin surge.

Hayes began buying the dips when Bitcoin was at 76K on 4/8 and later optimistically stated that Bitcoin will quickly move past $100,000, urging everyone to seize the opportunity.

I know Team Trump wants a weaker dollar, but a rapidly strengthening $JPY causes leveraged traders to unwind positions in US stocks and bonds. Thankfully $BTC knows that if bond yields rise, the BBC must print money.

Yachtzee 😘😘😘😋😋 pic.twitter.com/9PAY40b2O5

— Arthur Hayes (@CryptoHayes) April 22, 2025