tl;dr
Japan is experiencing a resurgence of inflation, reaching 3.6%, which has led to a significant selloff in its long-term government bonds, with yields hitting multi-decade highs. The Bank of Japan has cut bond purchases, causing losses for investors and raising concerns about Japan’s fiscal health, d...
Japan is facing a resurgence of inflation, now at 3.6%, which has triggered a sharp selloff in long-term government bonds. Yields on 40-year bonds surged to 3.56%, a multi-decade high, while 30-year yields reached a 25-year peak. This spike has caused significant losses for investors and raised concerns about Japan's fiscal health, described by officials as worse than Greece’s. In response, the Bank of Japan has aggressively cut bond purchases, offloading about 25 trillion yen ($172 billion) since early 2024, yet real yields remain negative, intensifying market volatility.
Amid this financial turmoil, Metaplanet, a Tokyo-listed company known for its Bitcoin treasury strategy, has emerged as Japan's most shorted stock after soaring over 5,000% in 2024. The company’s bold move to accumulate Bitcoin has attracted younger Japanese investors eager to find alternatives to traditional corporate careers. Metaplanet’s Q1 revenue reached $6 million, with 88% derived from Bitcoin earnings, and its recent Bitcoin holdings exceeded $126 million, surpassing El Salvador on certain metrics. However, its rapid rise has drawn skepticism, with hedge funds engaging in heavy short-selling, exploiting valuation spread arbitrage between Metaplanet, Bitcoin, and Bitcoin proxy stocks such as MicroStrategy.
This phenomenon illustrates a broader ideological clash in Japan’s financial landscape: on one side lies the fragility of fiat currency amid sovereign debt instability, and on the other, a growing confidence in cryptocurrency as a hedge or alternative store of value. Metaplanet has become a symbol of this anxiety, representing the tension between traditional financial structures and emerging crypto convictions during this critical economic juncture.
The unraveling of Japan's bond market has wider global implications, especially given Japan’s large holdings of US debt ($1.13 trillion). A sustained retreat from US Treasuries by Japan could exacerbate pressures on already fragile American bond markets. Investors worldwide are watching closely as Japan navigates this historic financial reset, with Metaplanet positioned at the epicenter of changing market dynamics and investor sentiment.