WHEN THE CARRY TRADE UNWINDS: JAPAN'S YIELD SHOCK SIGNALS BIGGER TROUBLE AHEAD

Japan's 30-year government bond yield just hit 3.6%—and this isn't just a Tokyo story. This is the inflection point for one of finance's biggest shadow forces: the global yen carry trade.

For over a decade, the playbook was simple. Borrow cheap Japanese yen, dump it into expensive risk assets across markets—crypto rallies, junk bonds, emerging market stocks, you name it. Easy money. But that window is crashing shut.

Here's what's shifting: As Japan's yields finally climb toward normal levels, the incentive to keep borrowing yen evaporates. Suddenly, those "risk-on" trades that have been quietly funded by carry positioning need to unwind. And unwinding is messy.

For crypto markets specifically, this matters. A meaningful portion of leverage in altcoins and DeFi positions was funded—either directly or indirectly—by access to cheap yen funding. When that dries up, it's not just the yen that weakens. It's the entire risk asset ecosystem that needs repricing.

Watch this closely: The larger the yen unwind, the more acute the forced selling pressure across crypto and other risk markets.