According to The Kobeissi Letter, Japanese equity funds experienced a historic $11.8 billion in net outflows last week, pushing the 4-week moving average to an all-time high of $4.0 billion due to investor concerns over surging long-term Japanese government bond yields (source: The Kobeissi Letter, June 2, 2025). This significant capital flight is drawing the attention of cryptocurrency traders, as shifting risk sentiment and potential liquidity movements could increase demand for digital assets like Bitcoin and Ethereum. Market participants are closely monitoring whether the ongoing outflows from traditional Japanese equities will fuel increased crypto inflows, making this a key trend for crypto trading strategies.

According to The Kobeissi Letter, the Bank of Japan reported a record $198 billion in unrealized losses from government bonds for Fiscal Year 2024, tripling last year's figure of approximately $66 billion as Japan’s 10-year yield surged to 1.5% by March end (Source: The Kobeissi Letter, June 1, 2025). This substantial increase in paper losses is driving heightened volatility in the yen, prompting crypto traders to monitor USDJPY movements closely for possible arbitrage and risk-off flows into digital assets. Bitcoin and stablecoins may see increased demand as investors seek alternatives amid concerns over Japan’s fiscal stability.

According to Farside Investors, the spread between the Bitcoin basis rate and government bond yields is narrowing. Given that government bonds are considered much lower risk, a further narrowing of this spread could potentially lead to a drying up of the basis trade. This analysis suggests a shift in the risk-reward balance for traders involved in basis trades, indicating a need for careful monitoring of these rates for future trading strategies.