Japan’s financial markets are facing renewed pressure as the Nikkei 225 fell about 2%, the yen weakened beyond recent intervention levels and bond yields climbed to multi-decade highs. The decline followed fresh US-Iran military strikes and erased about $150 billion in equity value in one session. US forces also struck Iranian rocket launchers near the Strait of Hormuz over the weekend, their first military action in a month, sending oil prices higher. Brent crude surged 5% to $90.61 a barrel, while US benchmark crude rose 2.7% to $85.66. Higher oil prices are adding to inflation expectations and contributing to market pricing for a possible Federal Reserve rate hike, alongside comments from Warsh. The stress could affect global liquidity through the yen carry trade (borrowing yen to fund investments elsewhere). Rising Japanese bond yields increase the cost of that funding and can prompt investors to unwind positions, tightening liquidity. Bitcoin, which can act as a high-beta liquidity proxy (an asset sensitive to liquidity shifts), may be especially exposed during thin-volume Asian trading hours. One former Bank of Japan board member said the rise in Japanese yields "threatens to spill over into U.S. markets and disrupt U.S. economic and financial stability." Bitcoin was trading at $77,992 and XRP at $1.36 at press time. The immediate spillover into crypto prices had not appeared, but more aggressive carry-trade unwinding could create broader risk-off positioning and forced deleveraging. For now, the impact on Bitcoin and XRP appears limited, while the key risk is whether pressure in Japan escalates into a wider shift in global positioning.