Bitcoin News Today: "Japan's Yield Surge Unwinds Carry Trade, Exposing Bitcoin to Global Liquidity Shifts"

Bitcoin fell to $84,000 in early December 2025, sparking speculation about whether Japan's bond market is the primary driver of the selloff or if broader factors are at play. Analysts and market participants are pointing to a potential Bank of Japan (BOJ) rate hike, which could unwind a massive yen carry trade and pressure risk assets like cryptocurrencies. The 10-year Japanese government bond yield surged to 1.84% in late November, its highest since 2008, while the yen strengthened against the dollar, reaching 155.49 after the BOJ signaled a possible 0.25% rate increase at its December 19 meeting. This shift has raised the probability of a tightening from Japan's ultra-loose monetary policy to 76%, according to bond investors, and triggered a broader market correction.

The yen's rise and bond yield spike are linked to the BOJ's pivot toward inflation-fighting measures, driven by imported inflation and fading political pressure for stimulus. "When domestic yields rise from nothing to nearly 2%, the math changes," said market analyst Perera, highlighting how higher borrowing costs in Japan are altering global capital flows according to analysts. The carry trade-borrowing in yen to invest in higher-yielding assets-has been a major source of liquidity for global markets. A tightening by the BOJ could force investors to unwind these positions, reducing demand for risk assets like Bitcoin and equities.

Bitcoin's price drop to $85,000 coincided with the yen's surge and bond yield rally, with analysts attributing the move to the unwinding of speculative positions. The cryptocurrency erased 5.5% of its value in 24 hours, wiping out $656 million in long positions, as traders braced for tighter monetary conditions. BitMEX co-founder Arthur Hayes noted that the BOJ's hawkish pivot could push USDJPY between 155 and 160, further pressuring Bitcoin. Technical indicators also suggest a bearish outlook, with the asset forming a bear flag pattern that projects a potential decline to $67,700.

Beyond Japan's bond market, other factors are compounding Bitcoin's weakness. Whale activity has intensified with 9,000 BTC deposited on exchanges in a single day, signaling heavy selling pressure. Exchange inflows and record stablecoin reserves-$51 billion on Binance-reflect defensive positioning as traders hedge against volatility according to market data. Meanwhile, China's continued crackdown on crypto trading and stablecoins added to the bearish sentiment. The People's Bank of China (PBOC) reiterated that virtual assets have no legal status and warned of risks like money laundering and illegal cross-border transfers. Despite these restrictions, an estimated 59 million Chinese users continue accessing offshore platforms, highlighting the persistence of demand in a tightly regulated market according to crypto analysts.

The interplay between Japan's monetary policy and global liquidity dynamics underscores the fragility of risk assets in 2025. While the BOJ's potential rate hike is the immediate catalyst, broader structural factors-including China's crypto crackdown and the unwinding of speculative positions-are amplifying Bitcoin's downward trajectory. Analysts caution that further declines into the $70,000–$80,000 range could occur if leverage in derivatives markets forces more liquidations.