Introduction: Why does what happens in Japan matter for your investment?
It may seem that Japan's economic decisions are far from affecting your day-to-day life, but the reality is that every fiscal and monetary move in Tokyo creates waves that reach Wall Street, the American bond markets, and the cryptocurrencies that many of us follow like $BTC Bitcoin and $XRP XRP. Japan, which is facing its first economic contraction in six quarters and a record public debt exceeding 230% of GDP, launched a massive fiscal stimulus package of ¥17 trillion (about $149 billion), aiming to reverse the slowdown. This move has unleashed volatility and adjustments in international capital flows, directly impacting the yields of U.S. Treasury bonds and the expectations for interest rate cuts by the Federal Reserve. Furthermore, it is influencing the digital market, where Bitcoin and XRP react to this global economic storm.[1][2][3]
## The Japanese fiscal context: massive stimulus amid contraction
The fiscal package approved by Prime Minister Sanae Takaichi is designed to incentivize investment and consumption through tax cuts and expansive policies to counteract the decline in GDP. At the same time, the Bank of Japan maintains low rates but signals that it could start raising them in 2026 to stabilize prices and the market.[4][5][6][7][1]
This stimulus, while seeking growth, increases debt issuance and raises yields on Japanese bonds, generating uncertainty about fiscal sustainability and pressure on international markets. The depreciation of the yen against the dollar reflects this tension and realigns financial flows.[6][8][9][10][1]
## Waves in global markets: American bonds under pressure
Japanese investors are reconsidering their investments in foreign bonds, especially in U.S. Treasuries, due to the growing attractiveness of domestic bonds and the reduced cost to hedge exchange rate risk. This capital repatriation reduces demand for Treasury bonds, lowers their prices, and raises their yields, increasing U.S. government financing costs and elevating global volatility.[11][12][13]
As a result, the probability of rate cuts in the U.S. for December decreased from 50% to 38% according to CME FedWatch, reflecting a more restrictive monetary policy in response to these movements. Stocks are also suffering, especially higher-risk ones, due to rising financial costs and lower liquidity.[12][13][14]
## Bitcoin and XRP: cryptocurrencies in the macroeconomic storm
Bitcoin, the "digital gold", is showing an increasing correlation with macro movements. While it has had a moderate recent decline (3-5%), it is still considered by many to be a safe haven in times of uncertainty and global inflation. Volatility in bonds and currencies influences its price, and the reaction to U.S. employment data and Fed decisions will be crucial for its next move.[15]
XRP, linked to Ripple and used in cross-border payments, also experiences volatility tied to these tensions. Declines of around 4% this month reflect increased uncertainty. However, its institutional adoption and role in international flows give it a special positioning to benefit from inflationary scenarios and global monetary adjustments.[16][15]
## Regulatory changes in Japan drive crypto adoption
In addition to the fiscal stimulus, Japan is promoting a tax reform for cryptocurrencies that reduces tax rates from up to 55% to a flat 20%, aligning them with the taxation of traditional financial products. This measure aims to foster institutional and retail investment, increase trading volume, and consolidate the country as an innovative hub for cryptocurrencies and Web3.[17][18][19]
This tax reform could help increase the liquidity and volatility of Bitcoin and XRP, as it reduces costs and barriers for Japanese investors, further accentuating the interdependencies between traditional macroeconomics and digital assets.
## The U.S. employment data: the next big test
The employment report to be released this week will be decisive in fueling or diminishing Fed expectations about interest rates. A solid figure could keep rates high and pressure on bonds and cryptos, while a weak figure could open the door to cuts that potentially encourage a recovery in risk assets.[20][12]
## Conclusion: between the traditional and the digital, an interconnected ecosystem
The Japanese stimulus and the responses in American bonds show us how interconnected today's traditional and digital markets are. Fiscal and monetary policy decisions, along with regulatory changes in cryptocurrencies, are reconfiguring not only the price of bonds and stocks but also shaping the evolution and adoption of assets like Bitcoin and XRP.
For investors, understanding these connections is vital for making informed decisions in a rapidly changing global environment.
***
This article integrates analysis, current data, and context, backed by reliable sources, to explain the economic phenomenon behind the ceiling and floor of financial and crypto markets in November 2025.
Sources
[1] Japan's Prime Minister Takaichi considers tax cuts ... https://www.fxstreet.es/news/la-primera-ministra-de-japon-takaichi-contempla-recortes-de-impuestos-para-impulsar-la-inversion-202511172342
[2] The Japanese economy contracts for the first time in six quarters ... https://www.infobae.com/america/mundo/2025/11/17/la-economia-japonesa-se-contrae-por-primera-vez-en-seis-trimestres-debido-al-impacto-arancelario/
[3] Japan validates a colossal stimulus plan of 17 trillion yen https://www.cointribune.com/es/japon-valida-un-plan-de-estimulo-colosal-de-17-000-billones-de-yenes/
[4] Japan will establish an economic stimulus plan amid ... https://es.tradingeconomics.com/japan/full-year-gdp-growth/news/500450
[5] Japan's government panel member, Kataoka, calls for a ... https://es.marketscreener.com/noticias/miembro-del-panel-gubernamental-de-jap-n-kataoka-solicita-un-paquete-de-est-mulo-de-149-000-millon-ce7d5fd3d181f224
[6] The Bank of Japan prepares for a possible rate hike in ... https://www.bloomberglinea.com/economia/banco-de-japon-se-prepara-para-posible-subida-de-tasas-en-diciembre-tras-ultimos-debates/
[7] Japan's Sleepy $8 Trillion Bond Market Wakes Up as Yields Climb https://www.bloomberg.com/news/articles/2025-10-01/japan-s-sleepy-8-trillion-bond-market-wakes-up-as-yields-climb
[8] Japan's Soaring Debt and Rising Borrowing Costs - AInvest https://www.ainvest.com/news/japan-soaring-debt-rising-borrowing-costs-looming-systemic-risk-global-markets-2511/
[9] Japan's worsening fiscal outlook raises risk of higher term ... https://www.oxfordeconomics.com/resource/japans-worsening-fiscal-outlook-raises-risk-of-higher-term-premium/
[10] Japan's super-long bond yields soar to records as market ... https://www.reuters.com/business/japans-super-long-bond-yields-soar-records-market-frets-about-demand-2025-05-20/
[11] A "capital repatriation wave" is underway in Japan! A "sell- ... https://www.moomoo.com/news/post/58022903/a-capital-repatriation-wave-is-underway-in-japan-a-sell
[12] Yen carry trade shift reshapes USD JPY forecast - Deriv https://deriv.com/blog/posts/yen-carry-trade-unwinding-market-outlook
[13] Rising Japan Bond Yields Reshape Global Borrowing Costs https://www.stonex.com/en/market-intelligence/09-04-2025-rising-japan-bond-yields-reshape-global-borrowing-costs/
[14] Japan's Stimulus Pivot Lifts Global Risk Appetite as Fed Uncertainty ... https://ng.investing.com/analysis/japans-stimulus-pivot-lifts-global-risk-appetite-as-fed-uncertainty-weighs-on-us-211094
[15] Bitcoin at the center of Japan's fiscal debate https://bitcoinycriptos.com/regulacion/bitcoin-en-el-centro-del-debate-fiscal-japones/
[16] How is Japan reshaping its cryptocurrency landscape ... https://www.onesafe.io/es/blog/japan-crypto-tax-reforms-market-innovations
[17] Cryptocurrency tax reform in Japan - Binance https://www.generallink.top/es/square/post/29631881176177
[18] Japan's bold tax shift in cryptocurrencies is a ... - Dexalot https://dexalot.com/es/blog/japan-crypto-tax-reforms-2025
[19] Japan's FSA plans to classify cryptocurrencies ... - TradingView https://es.tradingview.com/news/cointelegraph:60f46bc2a09cd:0/
[20] Japan's Fiscal Risks https://www.elibrary.imf.org/downloadpdf/display/book/9781498324687/ch004.pdf