The cost of borrowing money in Japan has hit a high not seen since 1996. On the same morning, the 30-year yield hit 4.185%, and the 10-year government bond yield hit 2.945%.

This is a huge shift for a country that has spent a lot of time fighting deflation with negative interest rates.

Meanwhile, Bitcoin’s price has soared 22% in the last week, reaching $80,000 for the first time since May. The central theme is the contrast between the volatile bond market in Japan and the relatively calm crypto sector.

The Carry Trade Arithmetic

Over the course of several years, the yen carry trade was a major factor propelling the world’s risk markets.

Investors converted their cheaply borrowed yen into dollars and used them to buy assets with…