Bitcoin Crash Below $85K Amid Massive Liquidations
Bitcoin plunged below $85,000 on December 1st, sparking over $500 million in liquidations within hours and slashing nearly $200 billion from total crypto market capitalization. The sudden crash followed hawkish remarks from the Bank of Japan, signaling potential rate hikes that sent shockwaves through leveraged crypto positions.
The trigger came as the Bank of Japan hinted at tightening monetary policy, disrupting the yen carry trade that had funneled trillions into risk assets, including crypto. Japanese 10-year bond yields surged, hitting their highest point since 2008, which bolstered the yen and forced a rapid unwind of leveraged bets.
The Numbers Behind the Crash
Within just a few hours, more than $500 million worth of long positions on Bitcoin got liquidated, according to trading data from major exchanges. This was the direct consequence of sharp price deterioration pressured by heightened bond yields and a stronger yen.
On-chain data revealed increased sell-side pressure as liquidations cascaded across derivatives platforms. Bitcoin price nosedived from $92,400 to below $85,000, shedding roughly 8%. Total market capitalization fell by $200 billion in one day, deepening the market’s slump.
Read: $84,670 at press time.
Market Sentiment Turns Dark
Analysts warn this marks Bitcoin’s worst November since 2018. The asset’s volatility spiked, and the Crypto Fear & Greed Index plunged into extreme fear territory, signaling mounting uncertainty.
“The looming rate hikes from Japan have rattled the yen carry trade, a critical source of funding for leveraged crypto positions. The unwind is pressuring Bitcoin sharply,” noted crypto strategist Alex Kruger on X.
Others remain cautious about Bitcoin’s near-term prospects. Some forecasts suggest a potential retest of $50,000 if selling momentum persists despite recent attempts at recovery.
Broader Market Impact and Next Moves
The sell-off extended beyond Bitcoin. Ethereum and multiple altcoins dropped between 7% and 12%, further reducing the total crypto market cap. Market-wide liquidations accelerated as traders scrambled to de-risk.
The yen’s strength against the U.S. dollar and a surge in Japanese bond yields poses fresh challenges for risk assets globally. Traders now watch the Bank of Japan’s next policy meeting closely for signs of further tightening.
Bitcoin’s immediate support appears near $83,000, but traders await clearer signals before stepping back into long positions. The race between further liquidations and possible stabilization will shape December’s price action.
Margin traders face heightened risk as volatility remains elevated, and liquidations can cascade rapidly on weaker resistance levels.
