What are Bitcoin and the Risk Premium: Challenges During Rising Japanese Government Bond Yields

Currently, Bitcoin is facing a new phase. According to the latest analysis from Delphi Digital, while BTC prices are stagnating, the gold market continues to perform steadily, and this divergence is closely related to the rising yields of Japanese government bonds. As of February 2026, BTC is trading around $71.28K, with a 24-hour volatility of -7.13%, indicating slight weakness. Meanwhile, the yield on Japan’s 10-year government bonds remains approximately 3.65 standard deviations above the long-term average, impacting the overall market.

Current BTC Price Trends and Impact on the Japanese Market

The stagnation in Bitcoin prices is largely influenced by changes in Japan’s interest rate environment. Typically, when yields rise, the opportunity cost of holding non-yielding assets like gold and other risk assets increases, putting downward pressure on these assets. However, in the current situation, both gold and yields are rising simultaneously, suggesting that market participants are pricing in structural risks such as monetary policy constraints and balance sheet vulnerabilities, rather than just growth expectations.

The Bank of Japan is structurally holding a large amount of long-term government bonds, resulting in significant exposure from an asset and collateral perspective. In this context, gold functions as a hedge against inflation concerns and systemic risks, attracting buying demand. Conversely, Bitcoin tends to be more sensitive as a risk asset, and a negative correlation with Japan’s 10-year government bonds has been observed.

Negative Correlation Between Gold and Bitcoin: Risk Assets and Risk Premiums

In market terms, the risk premium refers to the additional return investors expect for bearing risk. Currently, this risk premium is highly variable, with different asset classes being valued differently. Gold acts as insurance against policy risks and enjoys strong buying demand, while Bitcoin reacts more sensitively to economic cycles and liquidity conditions.

This reversal in correlation reflects a change in market participants’ risk perception. The sharp rise in Japanese government bond yields (an unprecedented level of 3.65 standard deviations) indicates that the market is significantly concerned about Japan’s financial and fiscal outlook. As a result, gold continues to be bought as a safe asset, while relatively newer risk assets like Bitcoin are under selling pressure.

Potential Market Impact of Bank of Japan Policy Interventions

Looking ahead, the Bank of Japan’s actions could be a critical turning point. If the BOJ actively intervenes to stabilize the bond market, some of the risk premiums embedded in gold may be alleviated. If bond yields stabilize, the opportunity cost of holding non-yielding assets will decrease, potentially leading to a rebound in risk assets like Bitcoin.

In the long term, Bitcoin appears to struggle during rising interest rate environments in Japan. However, if the BOJ responds appropriately and implements policy stabilization measures, the current excessive expansion of risk premiums could be corrected, creating new buying opportunities in risk assets, including BTC. Market participants should closely monitor developments in Japan’s monetary policy and bond market trends.