What’s behind bitcoin’s recent record highs?

Recent severe fluctuations in the Japanese bonds market may have contributed to bitcoin’s surge above $112,000, even more than the risk-negating geopolitical developments usually cited, according to European research agency Bitwise. 

It’s estimated that bitcoin’s surge could be linked to the trouble happening in Japanese bonds, with investors acknowledging bitcoin as a safe and alternative haven to disruptions in the traditional financial system.

Bitcoin hit a record high at $112,000 on May 22, before dipping near $109,700.

Even as some analysts link the surge to geopolitical developments, as US President Trump’s announcement of ceasefire talks between Russia and Ukraine, it seems that macroeconomic factors might have played a bigger role.

Japanese Bonds Collapse

Bitwise’s analysts point to the increasing worries about Japan’s sovereign credit rating, with long-term government note yields spiking.

Japan’s 30-year government note yield hit 3.185% in May 2025, a record high.

Government bonds are usually considered safe havens, but a surge in yields usually indicate concerns about the sustainability of government debt, with Japan’s debt to GDP ratio surpassing 250%, compared to 62% in Germany, even though both countries provide similar 30-year note yields at 3.1%.

Analysts believe that the steep decline in Japanese bond values might have pushed institutional investors to reconsider bitcoin’s role as an alternative safe investment. 

Sovereign Risks Bolster Crypto Appeal

Bitwise’s analysts believe that investors wary from the traditional financial systems in the US and Japan are heading to bitcoin as a hedge to usual investments. 

This is especially apparent as concerns about government defaults rise, which could very well send bitcoin prices towards $200,000 according to some analyses. 

It’s worth noting that Spot Bitcoin ETFs in the US are only $1.3 billion away from breaking their investment influx record of $6.49 billion, achieved in November 2024.