Bitcoin News Today: Rising JPY Yields Trigger Crypto Sell-Off, Exposing Macro Risks

Bitcoin's price dropped below $87,500 in early December 2025, marking one of its most significant declines in months as global markets reacted to a surge in Japanese government bond yields. The 10-year JGB yield hit 1.84%, its highest level since 2008, triggering a wave of risk-off trading that spilled into crypto markets. Over $640 million in crypto positions were liquidated within 24 hours, with Bitcoin and Ethereum both falling more than 5% amid broader de-risking across asset classes. Analysts attributed the sell-off to the unwinding of the long-standing yen carry trade, where investors borrowed low-interest yen to fund higher-yielding global assets. Rising Japanese yields now threaten to reverse this capital flow, tightening liquidity and amplifying volatility.

The macroeconomic shift coincided with a sharp drop in the probability of Bitcoin reclaiming its $100,000 peak by year-end. Prediction markets, which had previously priced this outcome at over 50%, now reflect a 24% chance, according to Polymarket and Kalshi traders. These platforms, which saw combined trading volumes exceed $42.4 billion in 2025, have become key barometers for market sentiment. Kalshi recently expanded its offerings by launching tokenized event contracts on the Solana blockchain, a move designed to tap into on-chain liquidity and compete with Polymarket's dominance. Galaxy Digital, meanwhile, is in advanced talks to provide liquidity to both platforms, signaling growing institutional interest in prediction markets as a tool for hedging and speculation according to CoinCentral.

The sell-off also underscored crypto's sensitivity to macroeconomic liquidity shifts. Unlike traditional markets, crypto lacks the depth to absorb sudden capital outflows, making it a "first to react, last to recover" asset class. This dynamic was evident in December's "Sunday slam," where Bitcoin fell 5% overnight as traders rushed to unwind leveraged positions. Prediction markets now reflect this uncertainty, with Polymarket traders pricing a 50% chance of a December Bank of Japan rate hike-a 7 percentage point increase from just days earlier.

Japan's bond market turbulence also highlighted structural risks in the global financial system. For decades, Japan's near-zero interest rates underpinned the yen carry trade, enabling cheap funding for risk assets. However, the 1.84% yield spike-a 11.19% one-day jump-marked a pivotal shift. "This is not a Japanese story. This is the global story," wrote Shanaka Anslem Perera, an analyst who has tracked systemic risks in global markets. He warned that the 30-year bond bull market may be ending, forcing a repricing of duration bets and leveraged positions. The timing is critical: the Federal Reserve has ended its quantitative tightening program, while U.S. Treasury issuance hits record levels, and China's demand for Treasuries wanes. Japan's yield rise could exacerbate liquidity strains, further pressuring crypto and other high-beta assets.

As the year-end approaches, investors are increasingly turning to prediction markets for clarity. Kalshi's recent $1 billion funding round at an $11 billion valuation and Polymarket's rumored $12–$15 billion valuation underscore the sector's growth. Galaxy Digital's entry as a liquidity provider could further accelerate adoption, particularly as Google and other platforms integrate real-time odds from these markets. Yet, the broader challenge remains: Bitcoin's path to $100,000 now hinges not just on technical factors but on global macroeconomic stability-a far more uncertain bet than many had anticipated.