The U.S. bond market has been getting interesting lately. The Federal Reserve has abandoned its previous pretense and started to aggressively buy $40 billion of U.S. Treasuries every month, a move that has caught people's attention. Behind this rapid action is Japan, once the "big daddy" of bond buyers, beginning to falter.

Data speaks for itself: in 1995, the U.S. debt was less than $5 trillion; by 2025, it has skyrocketed to $38 trillion, with the growth rate becoming increasingly outrageous. The market has obviously sensed something is wrong.

Where is the problem? Previously, Japan and China were the major buyers of U.S. debt. Now, China is choosing not to roll over maturing bonds, and Japan faces heavy issues in its own debt market, forcing it to raise interest rates to stabilize the situation. Institutions can only sell off U.S. Treasuries to gain liquidity—who has the spare funds to keep buying? If the Fed doesn’t act again, Treasury yields will soar, and the entire market could collapse.

Ironically, since September 2024, the Federal Reserve has cut interest rates six times, yet Treasury yields are rising instead, indicating mounting pressure. The $40 billion monthly purchase can indeed suppress market interest rates, but problems in the U.S. financial system are mounting. Who dares to say other funding sources won’t follow Japan's lead? When that happens, the Fed will have to keep increasing its purchases. Although market rumors suggest the purchase amount might drop to $20 billion, nothing is certain.

What impact will these operations have on the crypto asset market? It’s too early to tell definitively, but at least the changes in liquidity are worth close attention.