Bitcoin News Today: Japan's Yield Surge Exposes Crypto's Liquidity Crisis

Bitcoin's price plummeted below $87,000 in early Asian trading on Dec. 1, erasing $150 billion in market capitalization as a surge in Japanese government bond yields triggered a liquidity-driven selloff. The decline, which followed a fragile market structure with thin order books, highlighted vulnerabilities in the crypto market's ability to absorb institutional selling pressure amid macroeconomic volatility. Japanese 10-year bond yields hit 1.84%, a 17-year high, while two-year yields breached 1% for the first time since 2008, signaling a potential end to the Bank of Japan's (BOJ) ultra-low interest rate era. This shift repriced global carry-trade dynamics, tightening liquidity and forcing risk-off sentiment across asset classes.

The selloff was exacerbated by a week of historically low trading volumes, with weekly crypto trading activity collapsing to $127 billion-its lowest since July 2025. Bitcoin's volume specifically fell 31% to $59.9 billion, while Ethereum's dropped 43%, creating a shallow market depth that turned a technical correction into a liquidity crisis. Timothy Misir, head of research at BRN, described the event as a "liquidity-driven repricing" rather than a measured correction, noting that Bitcoin's decline below key resistance levels exposed structural weaknesses. The drop also triggered nearly $637 million in liquidations, with over 220,000 traders losing positions.

The market's fragility was further underscored by divergent positioning between Bitcoin and Ethereum. While Bitcoin futures open interest fell to $29.7 billion, Ethereum's surged by $900 million, with funding rates spiking to 20.4%-a level in the 83rd percentile for the past year. This lopsided risk profile, according to 10x Research, reflects speculative overheating in Ethereum despite a dormant network, raising concerns about mispriced risk. Meanwhile, Bitcoin's decline below the short-term holder cost basis-a key indicator of bull market health- suggests a deeper correction could be underway.

Macro triggers centered on the BOJ's policy signals. Governor Kazuo Ueda hinted at a potential rate hike at the December 18-19 meeting, sparking a yen rally and unwinding the yen carry trade that had funded risk assets for decades. Arthur Hayes, co-founder of BitMEX, noted that a rate hike would raise borrowing costs for global speculators, accelerating deleveraging. The yen's strength, coupled with rising Japanese yields, intensified pressure on leveraged positions, with Polymarket pricing a 52% chance of a 25-basis-point hike.

Looking ahead, Bitcoin faces a critical test at the mid-$80,000s for structural support. A failure to reclaim the low-$90,000s could extend the selloff toward $67,700, as technical indicators like the bear flag pattern suggest. On-chain data also reveals a shift in accumulation patterns, with retail buyers stepping in at distressed levels while institutional investors remain sidelined. Stablecoin balances on exchanges, however, have risen, indicating capital is on standby to deploy once liquidity conditions stabilize.

The broader implications of Japan's policy shift could ripple through global markets, particularly in crypto, where high-beta assets are often the first to reprice in tightening liquidity environments. With U.S. employment and ISM data looming, the week ahead will test the market's resilience in a landscape where fundamentals may finally outweigh leveraged speculation.