Hey, it’s Robert (otherwise known as Infra on YouTube and X)!

Bitcoin has started 2026 incredibly strong, but there’s a macro risk building beneath the surface that’s worth paying attention to.

Rising bond yields, shifting expectations from the Fed, and potential intervention from Japan could all contribute to higher volatility for Bitcoin.

Here’s what you need to know ⬇️

Bitcoin’s first two weeks of the year:

Bitcoin had yet another strong week, up over 4.5% and now up 8.4% on a year-to-date basis (worth remembering that the long-term average annual return for the S&P 500 is about 8%, which bitcoin has already accomplished in just two weeks).

That strength has been impressive, but a potential risk may be developing in the background: the bond market.

On Friday, the benchmark 10-year US Treasury yield surged to a four-month high above 4.20%, driven in part by renewed uncertainty around the future leadership of the Federal Reserve following comments from President Trump.

Major developments for the bond market

Going into the week, the ‘Two Kevins’ were the front-runners for the next Fed chair- Kevin Hassett (around 35% odds) and Kevin Warsh (around 43% odds).

This morning, however, Trump’s comments sent odds for Kevin Hassett sharply lower when he said that he ‘likes him in his current position’ (and that he ‘talks too much’, whatever that means). Now, Kevin Warsh’s odds have soared to 60% odds.

Kevin Warsh is widely regarded as less dovish than Kevin Hassett, so Warsh’s odds of moving up provided a bid into the dollar (due to the fact that he’d be less dovish than Hassett).

Due to the stronger dollar, Gold and bitcoin both sold off by about 1%. Not only that, but treasury yields moved higher on expectations by the bond market of fewer rate cuts.

And the Bank of Japan could cause even more problems for the bond market…

Japan and why it matters:

Another potential pressure point lies outside the US: Japan.

Over the past few months, the Japanese Yen has been weakening significantly versus the dollar (even reaching an all-time low versus the Euro this week). This might not seem important, especially to Americans, but it could spell major problems - why?

A weaker currency tends to fuel inflation, and Japan is already experiencing its highest inflation levels in more than 30 years. At the same time, the country has recently elected a more populist prime minister — part of a broader global trend toward populism.

These conditions increase the likelihood that Japanese authorities may step in to stabilize the yen.

What to be aware of:

When the yen weakens too quickly, Japan’s Ministry of Finance has historically intervened to support its currency.

This typically involves selling dollar-denominated assets, such as US Treasury bonds, to raise dollars, then selling those dollars to buy yen. That process can put upward pressure on US yields and inject volatility into global markets.

Similar interventions over the past few years have coincided with sharp market moves, including the “yen carry trade unwind” during the summer of 2024.

With USD/JPY approaching 159, verbal warnings from Japanese officials have increased, raising the risk of another intervention.

So what does this mean for Bitcoin?

A weaker dollar can be supportive for assets like gold and Bitcoin, but sharply rising yields often introduce volatility, particularly for risk-sensitive markets.

The last major yen intervention in mid-2024 coincided with significant swings in Bitcoin, with prices moving from roughly $53k to $70k, before falling back toward $49k and later recovering to all-time highs into the end of the year.

The key takeaway isn’t to predict price direction, but to recognize that Bitcoin is increasingly influenced by global bond markets, currency dynamics, and liquidity conditions. As these macro forces intensify, periods of heightened volatility should not be surprising…

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