According to The Kobeissi Letter, the US debt-to-GDP ratio has surged to approximately 10% above World War II levels, prompting Moody's to downgrade the US credit rating on May 17th (source: @KobeissiLetter, May 25, 2025). Although the US ratio is now at record highs, it remains only half of Japan's debt-to-GDP level, which highlights a global trend of sovereign debt escalation. This development increases uncertainty in traditional financial markets and may drive institutional and retail investors to seek alternative assets such as Bitcoin and other cryptocurrencies as a hedge against sovereign risk. Traders should monitor volatility in both forex and crypto markets as a result of heightened debt concerns and potential policy responses.

According to The Kobeissi Letter, the Bank of Japan currently holds 52% of all domestic government bonds, vastly outpacing holdings by life insurers (13.4%), banks (9.8%), and pension funds (8.9%). Bloomberg reports the Japanese government’s debt has reached $7.8 trillion. This unprecedented concentration of government bond ownership by a central bank signals ongoing aggressive monetary policy, raising concerns about yen stability and potential spillovers into the cryptocurrency market. Traders should monitor for increased volatility in JPY pairs and risk-on assets like Bitcoin, as shifts in Japanese monetary policy or bond yields could drive capital flows into crypto markets. Source: The Kobeissi Letter on Twitter, Bloomberg.