Bitcoin News Today: Japan's $135B Stimulus Stirs Debt Warnings and Yen Jitters

Japan's government has approved a historic $135.4 billion stimulus package, marking a bold fiscal expansion under new Prime Minister Sanae Takaichi to counter inflationary pressures and support households and businesses. The package, announced on Nov. 21, includes JPY 17.7 trillion in general account outlays and JPY 2.7 trillion in tax cuts, making it the largest such measure since the pandemic. The move aligns with Takaichi's campaign promise of "responsible proactive fiscal policy" but has reignited concerns about Japan's already towering public debt, which exceeds twice the size of its economy.

The stimulus aims to alleviate the burden of rising living costs, with immediate measures including energy subsidies, cash handouts for families, and the elimination of provisional gasoline taxes. Long-term investments in semiconductors and artificial intelligence also feature prominently. However, the package's scale has spooked bond markets, pushing the yield on benchmark 10-year Japanese government bonds to 1.835%, the highest since 2008. Goldman Sachs warned that the fiscal expansion could widen Japan's fiscal risk premium, exacerbating pressure on longer-maturity bonds and the yen.

Bitcoin, often seen as a hedge against inflationary fiscal policies, continued its slide despite the stimulus. BTC fell below $85,500, extending a sell-off from its October peak of $126,000. Technical analysts noted fragile price action, with Bitcoin struggling to hold key support levels like $92,000. The mixed signals reflect broader uncertainty: while Japan's liquidity injection could weaken the yen and boost risk assets, the timing-coupled with potential Bank of Japan rate hikes-creates a volatile macro environmenthttps://beincrypto.com/japan-gdp-contraction-stimulus-bitcoin/.

The government also plans regulatory changes to integrate cryptocurrencies into the financial system, reducing capital gains taxes on digital assets from 55% to 20%. This shift, effective alongside the stimulus, aims to broaden participation in crypto markets but remains a secondary factor amid broader fiscal and monetary tensions.

Goldman Sachs highlighted the challenge of balancing Takaichi's aggressive fiscal stance with Japan's long-term debt sustainability. With the Bank of Japan hinting at possible December rate hikes, the interplay between fiscal stimulus and monetary policy could drive further yen weakness and global capital flows. Analysts remain divided: while some view Japan as a test case for stimulus-driven economic recovery, others warn of spillover risks to global markets.