Japanese bonds stabilize, driving the crypto market to rebound on Thursday, giving Bitcoin and Ethereum a breather

After experiencing significant volatility earlier this week, the cryptocurrency market saw a clear stabilization and rebound on Thursday evening (29th). Bitcoin’s price recovered to around $88,280, while Ethereum remained above $2,960. The main driver behind this was the two-day continuous recovery in the Japanese government bond market—an event that fundamentally alleviated the liquidity crisis troubling global financial markets.

The decline in long-term Japanese government bond yields has completely shifted market sentiment. Early last week, the Japanese bond market faced selling pressure, causing the 30-year government bond yield to rise to multi-year highs, prompting senior government officials to call for market stabilization. This intervention had immediate effects—yields fell back, and global borrowing costs declined accordingly.

How the Japanese Bond Crisis Impacted the Global Crypto Market

Few realize how the volatility in Japan’s bond market transmits to the global financial system. As an indicator of global capital flows, rising Japanese bond yields directly push up the global risk-free rate benchmarks. When long-term bond yields surge rapidly, investors are forced to reassess the attractiveness of risk assets—assets like Bitcoin and Ethereum, which are highly volatile, are hit first.

Last week, the wave of Japanese bond sell-offs triggered a general rise in global bond yields, including U.S. Treasuries. This means investors could earn higher returns by holding safer, more stable debt instruments, reducing the need to take on crypto asset risks. As a result, capital withdrew en masse from the crypto markets—Bitcoin briefly dropped below $88,000, and altcoins suffered even steeper declines. Leveraged traders were forced to liquidate positions, further exacerbating the downturn.

Positive Signals from Yield Declines

The situation from Wednesday to Thursday indicates that Japanese officials successfully stabilized market expectations. The decline in long-term bond yields was not only numerically significant but also sent a clear message to the market: excessive tightening is not the intended policy.

This shift has profound implications for the crypto market. The decline in global borrowing costs creates a more favorable financing environment, prompting institutional investors to reconsider allocations to high-yield assets. Bitcoin again becomes a more attractive choice, and mainstream tokens like Ethereum, Solana, and Cardano also resumed upward momentum.

It is important to note that this stability is not a long-term solution. If Japanese bond yields rise again—an ongoing risk—cryptocurrencies will face renewed pressure. The market remains highly sensitive to changes in yields, and any policy signal shift could trigger another wave of volatility.

Market Performance of Mainstream Crypto Assets

According to CoinGecko data, Thursday’s rebound involved major players in the crypto market. Besides Bitcoin and Ethereum, key tokens like Solana, XRP, and Cardano also recovered from their early-week declines. This broad recovery indicates an overall improvement in market sentiment, rather than specific positive news for individual coins.

Notably, XRP has gained 1.18% over the past 30 days, demonstrating relative resilience. Meanwhile, the US-listed spot XRP ETF absorbed $91.72 million in inflows this month, contrasting with the continued outflows from Bitcoin ETFs. This suggests some institutional investors are diversifying their portfolios and remain optimistic about XRP’s fundamentals or medium-term prospects.

Special Case: NFT Market and the Rise of Pudgy Penguins

Amidst the significant volatility in the crypto market, Pudgy Penguins has emerged as the strongest native NFT brand in this cycle. The project adopted a completely different strategic approach—initially focusing on mainstream channels to acquire users (toys, retail collaborations, viral marketing), then guiding users into Web3 through games, NFTs, and the PENGU token—building a diversified ecosystem.

Data shows that the Pudgy ecosystem has achieved over $13 million in retail sales and sold more than 1 million units. Its flagship game, Pudgy Party, surpassed 500,000 downloads within two weeks, and the PENGU token has been distributed to over 6 million wallets. Although current market valuation for Pudgy is premium compared to traditional IP peers, sustained success depends on deep execution in retail expansion, game adoption, and token utility.

Risks and Market Outlook

Thursday’s rebound provided a necessary breather for the market, but the underlying fragility remains. The crypto market’s high sensitivity to bond yields means that any shift in global interest rate policies could quickly change the current situation. Investors should stay vigilant and closely monitor policy developments in Japan and the US, as these signals will continue to influence the medium-term trajectory of crypto assets.