Japan’s record debt: Could Bitcoin benefit from the economic strain?

122 Trillion Yen: Tokyo’s Risky Gamble

February 20th marks a decisive turning point in Japanese monetary policy. The government of Prime Minister Sanae Takaichi has officially submitted three major budget bills to parliament. The plan is audacious: simultaneous tax cuts coupled with record spending, all financed by a massive deficit. The 2026 budget thus reaches the staggering amount of 122.3 trillion yen (approximately $793 billion).

For macroeconomic analysts, this is a clear signal: Japan is choosing monetary escapism. By flooding the market with liquidity to support its growth, Tokyo mechanically weakens the intrinsic value of its currency. In financial jargon, this is called competitive devaluation, but for the average saver, it mostly looks like programmed loss of purchasing power.

This massive liquidity injection recalls the aggressive policies of Western central banks post-Covid. Recent history has proven to us that when the money printer runs hot, assets with limited supply like Bitcoin tend to outperform. The market is already anticipating downward pressure on the Yen, which could create a spillover effect toward digital assets.

Bitcoin: The Safe Haven Against the Yen’s Fall?

Why should Bitcoin traders watch Tokyo like a hawk? The answer comes down to one word: correlation. Historically, Bitcoin has often acted as a hedge against struggling fiat currencies. If the Yen drops against the Dollar and other major currencies following this announcement, the BTC/JPY pair could experience a spectacular rally.

Japanese investors, seeing their national currency depreciate, could rush toward Bitcoin to preserve their capital, thus increasing buying pressure. We’ve already observed this phenomenon in the past: when confidence in fiat currency erodes, Bitcoin resumes its role as digital gold. This is an ideal technical setup for a breakout above current resistance levels.

Moreover, this “unlimited debt” policy reinforces Bitcoin’s fundamental narrative: a decentralized, uncensorable currency whose issuance is mathematically limited. Faced with a government choosing monetary supply inflation, Bitcoin appears more than ever as the ultimate anti-fragile asset. Whales could well take advantage of this macroeconomic divergence to accumulate massively. According to Jeff Park, we’re entering an “era of war to acquire Bitcoin.”

Should We Expect a New Bitcoin ATH This Week?

The situation in Japan could be the spark the market was waiting for to break out of its lethargy. If Asian markets react as volatilely as expected, we could witness a rapid increase in volatility across the entire crypto market. Traders should remain cautious however: a surprise intervention by the Bank of Japan (BoJ) to support the Yen could trigger a temporary flash crash.

Nevertheless, the underlying trend seems clearly bullish. With such an influx of liquidity into the Japanese financial system, some of this capital will inevitably spill over into risk assets. The question is no longer really whether Bitcoin will react, but with what magnitude. On-chain indicators already show some agitation: is this the beginning of a bull run fueled by sovereign debt?

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