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Wall Street is all smiles after President Trump's Japan deal sent stocks soaring, which is great—but Japan’s bond market is imploding. Today, we’re taking a look at what they might do to fix it and how Bitcoin could be poised to soar as a result.

Meanwhile, tech earnings are painting a mixed picture: Alphabet beat expectations but spooked investors with plans to boost capital spending, while Tesla reported disappointing Q2 numbers and dropped 8%.

The saving grace? Promises of that long-awaited affordable model in 2025.

But the wildest story might be Elon Musk's other venture: Neuralink.

More on these stories below.

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US stocks climbed on Wednesday after a trade deal with Japan sparked optimism.

Alphabet $GOOGL ( ▲ 0.53% ) beat expectations with Q2 earnings, driven by strong advertising and cloud performance. However, a planned increase in capital expenditures to $85 billion sent shares down 1%.

Tesla $TSLA ( ▲ 3.52% ) reported a slight miss on Q2 earnings, with revenue at $22.50 billion, down 9% year-over-year. Plans for a more affordable model in 2025 kept investor interest alive—but shares still sank 8% today.

Elon Musk's Neuralink expects to generate $1 billion in annual revenue by 2031, planning to implant brain chips in 20,000 people yearly across five major clinics.

Treasury Secretary Scott Bessent fueled claims of political bias in the Fed's economic forecasts, aligning with President Trump's call for a significant rate cut.

Supreme Court hands President Trump another victory, allowing him to fire Democratic commissioners from the Consumer Product Safety Commission despite Congressional job protections.

What is Japan’s dysfunctional bond market telling us about Bitcoin’s price? And what did their Central Bank just do that has heads turning toward BTC with renewed interest?

To answer those two questions, we need some context for where Japan is at right now. The White House’s new trade deal with Japan is good for the US—Japan will invest $550B into our economy and will still pay a baseline 15% tariff. In short, 90% of all profits from the deal go to the US.

Which begs the question—why in the world would Japan say “yes” to a deal like that?

The answer might be as simple as this: Japan can’t afford to say no. That’s how bad the situation is with their economy; Japan’s debt-to-GDP ratio is over 260% (Australia’s is 49.6% for comparison), and government bond demand is drier than it’s been in 14 years.

Indeed, Japan is in what economists call a potential “sovereign debt crisis.” (We’ll get to its effect on Bitcoin in a moment)

Its 30-year bond yield reached 3.195%, the highest ever, on July 15. The 10-year yield is at 1.6%, the highest since 2008’s housing market crash. Remember, a bond is just a fixed-income investment in government debt for a specific amount of time.

These rapidly rising treasury yields are heavily affecting other countries’ economies, too—namely that of the US, which has a rising debt-to-GDP ratio itself (124%) and a 10-year yield of 4.43%. We can get into that another day, though.

What you need to understand is that investors are less likely to trust that a country will repay its debt when yields are high like this. This has a compounding effect of further increasing Japan’s treasury rates—because demand is decreasing, driving rates higher, which decreases demand further… you get it. This dynamic has created what Bitwise’s head of European research André Dragosch calls a “fiscal debt doom loop.”

But how does this affect Bitcoin? 

Look at these two charts. The first is Bitcoin’s price over the past six months, and the second is Japan’s 30-year yield rate. See the similarities?

They aren’t a perfect 1:1 match, but we’re especially intrigued by the way they seem to sync up more from April to now. 

It appears that Japanese investors (and the world at large) are investing more in non-government-dependent assets like Bitcoin when Japan’s Treasury yields go higher—because it’s a hedge against the potential risk that Japan could default on its debt. And the world at large cares about that default risk because Japan’s bond market deeply affects that of the US, which majorly affects every other country in the world.

So moving forward, how will Japan solve its debt crisis? Arthur Hayes, co-founder of BitMex, predicted in his 2024 essay “Shikata ga Nai” that Japan’s strategy for getting Treasury yields in check would be monetary easing (typically lowering interest rates + injecting liquidity). And he thinks if that happens, the liquidity burst would send Bitcoin’s price to the moon.

And in fact, just last week, Japan made a subtle but fiscally monumental move that aligns with Hayes’ prediction—and could be a major signal that Bitcoin investors are in for the ride of a lifetime.

See the move Japan’s Central Bank just pulled that could send BTC flying →

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The information provided in Stocks & Income is for informational and educational purposes only and should not be construed as financial advice, investment advice, or a recommendation to buy or sell any securities. Stocks & Income is not a registered investment advisor, broker-dealer, or licensed financial planner. Always do your own research and consult with a licensed financial advisor before making any investment decisions. We may hold positions in or receive compensation from the companies or products mentioned. Disclosures will be made where applicable.