While markets are mesmerized by the escalation in the Middle East, the true reason for Bitcoin's recent drop to $62,000 lies in a completely different area. Contrary to popular belief, the geopolitical factor here is merely a smokescreen. The real trigger is historic volatility in Japan's debt market.
Japanese Bonds: A Shock in 30 Years
On July 9, the yield on 10-year Japanese government bonds (JGBs) reached 2.9% for the first time in three decades. However, the very next day saw a crash of 16 basis points to 2.71%. This is the largest single-day drop since April 2025. A similar dynamic affected 30-year bonds, with a decline of 13 basis points to 3.87%.
The reason for the reversal is a statement by Japan's Finance Minister about plans to encourage pension funds, including the giant GPIF ($1.8 trillion in assets), to increase investments in domestic assets. Such a move could redirect capital from foreign instruments into JGBs, reducing pressure on the domestic debt market and supporting the yen.
Connection to Bitcoin: Not Obvious, but Direct
Analyst Michaël van de Poppe directly points out that Bitcoin's correction is almost unrelated to events in the Persian Gulf. "Everyone is looking at the Middle East, but the real importance is in Japanese bonds," he notes. In his assessment, the current JGB volatility surprisingly mirrors scenarios from past crises, including April 2025, when 30-year bond yields surged by 100 basis points following the introduction of global tariffs by Trump.
Van de Poppe expects a yield reversal downward in the next one to two weeks, which, in his view, will automatically trigger a positive breakout in Bitcoin. At the time of writing, BTC is trading around $62,700.
On-Chain Foundation: Weakness Persists
Beyond macroeconomic factors, the Bitcoin market shows internal weakness. Analyst Darkfost highlights the behavior of short-term holders (STHs): the asset has been trading below their average entry price ($70,700) for over nine months. Such prolonged periods of losses have historically coincided with bearish phases.
The key issue is demand. The 30-day moving average of spot demand has been negative since December 2025. In mid-June, the indicator hit an extreme of -273,000 BTC, and it is now around -100,000 BTC. Some activity is shifting to futures, but speculative demand is not enough to ensure a sustainable reversal.
At the same time, CryptoQuant analyst Zizcrypto notes partial normalization: the Composite Index v.2.0 stands at 0.484, below the elevated risk zone but above levels from past cycles (0.05 in 2018, 0.13 in 2022). The situation is described as a "partial reset" — recovery has begun, but the depth of the correction has not yet reached the bottom of previous bear markets.
My professional opinion: Until the Japanese debt market stabilizes, Bitcoin will remain a hostage to this macroeconomic dynamic. However, it is precisely such periods of historic volatility that often precede strong reversals. To confirm a bullish scenario, as Glassnode points out, a consolidation above $76,600 is necessary.