Bitcoin News Today: Japan's Bond Crisis Sparks Global Crypto Sell-Off as Yen Carry Trade Unwinds

The Hidden Reason Crypto Is Crashing as Bitcoin Price Falls Below $86,000

Bitcoin's price plummeted below $86,000 on November 21, 2025, marking one of the steepest declines in months, as broader crypto markets mirrored a global selloff driven by unexpected turbulence in Japan's bond market. While factors like ETF outflows and geopolitical tensions contributed, analysts point to a deeper, systemic issue: a sudden spike in Japanese government bond yields that has destabilized the yen carry trade-a decades-old liquidity engine for global markets-and triggered a cascade of forced selling across risk assets, including cryptocurrencies according to analysis.

Japan's 30-year bond yield surged to 3.41%, the highest since 1999, following the government's announcement of a $135.4 billion stimulus package aimed at cushioning households from inflationary pressures according to reports. The move, intended to bolster domestic demand, instead sent shockwaves through global financial markets. With Japan's debt load exceeding 230% of GDP, rising yields threaten to escalate annual debt servicing costs by billions, pushing the country closer to a "debt death spiral" as financial data shows. The Bank of Japan, caught between inflationary pressures and fiscal sustainability, has signaled it will continue monitoring economic data closely but has yet to commit to tighter monetary policy according to market analysis.

As Japanese bond yields climbed, the yen strengthened against the dollar, undermining the profitability of the yen carry trade-a practice where investors borrow cheap yen to fund higher-yielding global investments. This trade, estimated to underpin $20 trillion in leveraged positions, is now unwinding rapidly. Financial institutions are forced to deleverage by selling liquid assets, including stocks, tech equities, and cryptocurrencies, to meet margin calls and repatriate capital to Japan as financial institutions report. "The entire system is collapsing because liquidity is evaporating," said one analyst, noting that Bitcoin's 26% drop from its October peak reflects this forced deleveraging rather than sentiment-driven panic according to market analysis.

Japan's fiscal and monetary policies now loom as a critical risk for global markets. A weak bid-to-cover ratio in the upcoming 40-year bond auction could signal insufficient demand, according to financial analysis further spiking yields and accelerating the unwind. If the Bank of Japan raises rates at its December meeting-a 51% probability per current markets-the yen could surge further, exacerbating the selloff. Conversely, maintaining loose policy risks inflation spiraling, as market data suggests.

The selloff extends beyond crypto. Asian stocks, led by Japan's Nikkei, fell sharply as investors braced for further volatility, while gold and equities also declined according to market data. For crypto, the impact is compounded by existing headwinds, including cooling institutional demand and uncertainty over U.S. Federal Reserve policy as financial reports indicate. Ethereum, XRP, and Solana all slid by 3–5.6%, with on-chain data showing increased activity from short-term holders-a pattern often seen near market bottoms according to analysis.

For crypto investors, the lesson is clear: macroeconomic forces, not just crypto-native dynamics, dictate market trajectories. "This isn't a typical correction-it's a global liquidity shock," said Shanaka Anslem Perera, an analyst cited in multiple reports. As Japan's bond market remains volatile, expect continued turbulence in crypto and other risk assets until liquidity pressures abate according to financial analysis.