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Bitcoin News Today: "Japan's Rising Yields Reverse Carry Trades, Making Bitcoin Vulnerable to Changes in Global Liquidity"

Bitcoin News Today: "Japan's Rising Yields Reverse Carry Trades, Making Bitcoin Vulnerable to Changes in Global Liquidity"

Bitget-RWA2025/12/01 22:58
By:Bitget-RWA

- Bitcoin dropped to $84,000 as Japan's BOJ signaled a potential 0.25% rate hike, unwinding yen carry trades and pressuring risk assets. - China's crypto crackdown and $51B stablecoin reserves on Binance amplified bearish sentiment amid global liquidity shifts. - Analysts warn Bitcoin could fall to $67,700-$80,000 if derivatives liquidations and tightened monetary policies persist.

Bitcoin Slides Amid Shifting Japanese Monetary Policy

In early December 2025, Bitcoin tumbled to $84,000, fueling debate over whether Japan’s bond market is the main culprit or if wider global forces are at work. Many experts point to the Bank of Japan’s (BOJ) potential interest rate increase as a key factor, which could prompt investors to unwind the popular yen carry trade and put pressure on riskier assets, including cryptocurrencies.

By late November, yields on 10-year Japanese government bonds had climbed to 1.84%—their highest level since 2008. At the same time, the yen strengthened against the US dollar, reaching 155.49, after the BOJ hinted at a possible 0.25% rate hike during its upcoming December 19 meeting. This shift has led bond investors to estimate a 76% chance that Japan will move away from its long-standing ultra-loose monetary policy, sparking a broader market correction.

The yen’s appreciation and rising bond yields are tied to the BOJ’s renewed focus on curbing inflation, which has been driven by higher import costs and a decline in political support for economic stimulus. As market analyst Perera notes, “When domestic yields rise from nearly zero to almost 2%, the investment landscape changes dramatically.” Higher borrowing costs in Japan are now influencing global capital flows, according to analysts.

The yen carry trade—borrowing in yen to invest in higher-yielding assets elsewhere—has long provided liquidity to global markets. Should the BOJ tighten policy, investors may be forced to unwind these trades, reducing demand for assets like Bitcoin and stocks.

Bitcoin and Japanese Market

Bitcoin’s decline to $85,000 happened alongside the yen’s rally and surging bond yields. Analysts attribute this drop to traders closing speculative positions. Over a single day, Bitcoin lost 5.5% of its value, erasing $656 million in long positions as the market braced for tighter financial conditions. Arthur Hayes, co-founder of BitMEX, suggested that the BOJ’s hawkish stance could push the USDJPY exchange rate between 155 and 160, adding further pressure on Bitcoin. Technical analysis also points to a bearish trend, with a bear flag pattern indicating a possible fall to $67,700.

Additional Pressures on Bitcoin

  • Large holders, or “whales,” have ramped up activity, with 9,000 BTC moved to exchanges in a single day, signaling increased selling.
  • Exchange inflows and record stablecoin reserves—$51 billion on Binance—suggest traders are taking defensive positions to guard against volatility, according to market data.
  • China’s ongoing crackdown on cryptocurrency trading and stablecoins has further dampened sentiment. The People’s Bank of China (PBOC) has reiterated that digital assets lack legal status and warned of risks such as money laundering and illicit cross-border transfers. Despite these measures, around 59 million Chinese users reportedly continue to access offshore crypto platforms, underscoring persistent demand even under strict regulation, according to crypto analysts.

Looking Ahead: Fragile Outlook for Risk Assets

The evolving relationship between Japan’s monetary policy and global liquidity highlights the vulnerability of risk assets in 2025. While the BOJ’s potential rate hike is the immediate trigger, broader factors—including China’s regulatory clampdown and the unwinding of leveraged positions—are intensifying Bitcoin’s downward momentum. Analysts warn that if leverage in derivatives markets leads to further forced liquidations, Bitcoin could slide further into the $70,000–$80,000 range.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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