Japan's long-standing "self-blood transfusion + low interest rates" trick has lasted for thirty years, but it's coming to an end.

By 2025, Japan's 240% GDP debt ratio will no longer be able to contain the situation—10-year Japanese government bond yields surged to 1.83%, a new high in 208 years, and the 40-year yields even broke through 3.7%. The yen fell below the 158 mark against the dollar, and the shadows of a triple decline in stocks, bonds, and the currency are already emerging. The chain reactions in the global financial markets are triggering one after another.

The new Prime Minister's stimulus plan injecting 21.3 trillion yen has completely broken this old cycle. The central bank is now caught in a deadlock: raising interest rates to fight inflation would cause debt defaults; not raising rates means the yen continues to depreciate, inflation spirals out of control, and with a current rate of 0.5%, real interest rates are still negative at -2.5%. Savers' money is shrinking every day.

The harshest blow has arrived—Japanese insurance companies are starting to sell off overseas assets en masse and turning to domestic bonds. What does this mean? The U.S. debt has lost one of its biggest buyers. Global borrowing costs are forced to rise, and the chain reaction has just begun. The situation caused by last year's rate hikes is still fresh in memory: the Nikkei plummeted 12.4%, the crypto market followed suit, and 230,000 traders faced margin calls. This carry trade position is lurking in exchanges and could potentially trigger a major event by 2026.

For the crypto world, this situation has two sides. On one hand, the yen's depreciation has sparked safe-haven demand, and Japan is even considering allowing banks to trade Bitcoin, turning digital assets into a new tool against inflation. On the other hand, if global credit tightens, highly leveraged crypto assets will be the first to be hit, dragging down the entire market.

Three signals are enough to watch: whether the 30-year Japanese government bond can stay above 3.5%, whether the yen can hold the 160 level, and whether a simultaneous crash in stocks, bonds, and the currency will occur. If any of these triggers, a storm could be unleashed. Will Japan choose a "boiling frogs" debt dilution approach or face a hard landing head-on? Can the crypto market truly become a safe haven, or will it be swept into a new wave of sell-offs? These are the key points to watch next.