Bitcoin News Today: Yen Carry Trade Unwinding Drives Bitcoin Below $86K Amid Global Liquidity Shifts

Bitcoin's price plummeted below $86,000 on Monday, driven by a surge in expectations for a Bank of Japan (BOJ) rate hike and the subsequent unwinding of the yen carry trade, according to market analysts. The cryptocurrency, which had rebounded to $93,000 in late November, faced renewed selling pressure as Japanese two-year bond yields hit their highest level since 2008, strengthening the yen and squeezing leveraged positions in risk assets. The move erased billions in market value, with over $640 million in crypto positions liquidated, including $188.5 million in Bitcoin longs.

The BOJ's potential shift from ultra-low rates has amplified concerns about global liquidity, as the yen carry trade - where investors borrow in yen to fund higher-yielding assets - has long underpinned risk-on markets. Arthur Hayes, co-founder of BitMEX, linked the BTC selloff to a USD/JPY range of 155–160, which signals a hawkish BOJ stance. Meanwhile, the yen's strengthening pushed Japanese government bond yields to 1.84%, triggering a broader risk-off sentiment and accelerating the sell-off.

Amid the turmoil, Bitcoin's technical indicators suggested further downside, with a bear flag pattern projecting a potential drop to $67,700. However, BTIG argued that Bitcoin's 36% drawdown from its October peak of $126,000 had pushed it into oversold territory, creating conditions for a "reflex rally" toward $100,000. This view is supported by prediction markets, which now price an 89% chance of a 25-basis-point Fed rate cut in December, up from sub-30% odds earlier in November.

The Fed's dovish pivot, coupled with Bitcoin's seasonal tendency to bottom around late November, has fueled speculation of a short-term rebound. Yet, the path to $100,000 remains fraught. Over-leveraged long positions remain vulnerable, as demonstrated by the $200–$400 million in liquidations triggered by the Yearn Finance yETH exploit and BOJ-driven volatility.

Crypto ETFs also compounded market weakness, with U.S. spot Bitcoin ETFs recording $3.48 billion in net outflows in November - the second-largest redemption month on record. While miners like CleanSpark and Riot Platforms rallied alongside Bitcoin's late-November rebound, the sector's performance remains contingent on macroeconomic stability.

Looking ahead, key catalysts include the December 9–10 FOMC meeting, where Fed policymakers will likely confirm a 25-basis-point cut. A surprise no-cut decision could trigger a sharp repricing in both Bitcoin and miners. On-chain metrics, such as Bitcoin's open interest and perpetual funding rates, suggest a more balanced market structure, but renewed inflows into ETFs or leveraged positions could reignite volatility.

For now, Bitcoin sits in a precarious equilibrium. The $80,000 level - historically a key support - remains the next critical threshold. As global liquidity conditions remain fluid, traders must navigate a landscape where macroeconomic shocks, regulatory developments, and protocol-specific risks continue to collide.