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Japan, the world’s largest foreign holder of US government debt, is stoking market anxiety as analysts warn that a potential large-scale bond sell-off could be approaching. The concern is rippling into the crypto sector, where Tether, issuer of the USDT stablecoin backed primarily by over $113 billion in US Treasuries, faces renewed scrutiny over possible depeg risks. Sponsored Analysts Warn Japan Could Dump US Treasuries as Domestic Yields Surge According to the latest data from the US Department of the Treasury, foreign appetite for US Treasuries weakened in September. Total overseas holdings edged down to $9.249 trillion, a slight dip from August. Nonetheless, Japan was the exception to this slowdown. The country extended its nine-month buying streak, increasing its holdings to $1.189 trillion, the highest amount it has held since August 2022. This reinforces Japan’s long-standing position as the largest foreign owner of US Treasuries. “They bought foreign debt because Japanese bonds yielded almost nothing,” an analyst stated. That spread made US debt an attractive, low-risk yield alternative. But the macro backdrop is shifting. As BeInCrypto previously highlighted, yields on Japanese government bonds have climbed to their highest levels in years. With domestic yields improving, the incentive to continue accumulating US Treasuries weakens. It also raises the possibility that Japan may reduce its exposure if market conditions or policy priorities shift further. “​Japan’s long-ignored debt crisis is surfacing, as its 230% debt-to-GDP burden collides with a massive new fiscal expansion under PM Sanae Takaichi, triggering a sharp spike in bond yields and investor alarm. A shock in Japan could reverberate worldwide, especially given Tokyo’s role as the largest buyer of U.S. Treasuries, raising the stakes for global markets already strained by rising borrowing costs and shrinking fiscal room,” Lena Petrova stated. Sponsored This could also hurt the US if Japan…

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Filed under: News - @ December 8, 2025 7:26 am