Bitcoin Crashes Below $87,000 as Japan’s Bond Shock Sparks Global Crypto Sell-Off

How a Move in Japan Triggered One of Bitcoin’s Sharpest December Drops

Bitcoin entered December with a sharp downturn, sliding below $87,000 after a sudden spike in Japan’s government bond yields triggered panic across global markets. The fallout spread instantly to the crypto sector, erasing billions in market value within hours.

This wasn’t a typical correction. It was a macro-driven shock event — and every major asset class felt it.

What Triggered Today’s Crash? The Japan Yield Shock Explained

1. Japan’s 10-Year Bond Yields Surged Unexpectedly

The Bank of Japan’s policy adjustment sent government bond yields higher than markets anticipated.

• When yields spike, traditional markets tighten.
• Investors unwind risk-heavy positions — crypto is the first to get hit.

This forced the unwinding of the yen carry trade, one of the biggest global liquidity engines over the past decade.

2. Yen Carry Trade Unwind → Liquidity Drain → Crypto Sell-Off

The carry trade works like this:

• Borrow yen at low rates
• Invest in high-risk assets (stocks, bonds, crypto)
• Profit from the interest rate differential

When yields jump:

 ✔ borrowing becomes expensive

 ✔ leverage unwinds

 ✔ investors exit risk assets fast

This exact chain reaction hit Bitcoin, pushing it sharply lower.

BTC Price Snapshot (02-12-2025)

• Price Low Today: ~$86,500
• 24h Drop: −6%
• 7-Day Trend: Negative
• Market Cap: Fell below the $1.8T mark

The sell-off hit the entire market, but Bitcoin absorbed the first wave of panic.

Leverage Flush: Why Bitcoin Fell Faster Than Expected

Over $500 Million Liquidated Across Crypto

Heavy leverage amplified the collapse. As spot prices fell:

• Long positions were automatically closed
• Open interest dropped sharply
• Funding rates flipped deeper into negative territory

This indicates traders were still heavily long at the start of December — an unstable setup ahead of a macro shock.

BTC Technical Weakness

Today’s move broke below two key support zones:

• $89,000 — short-term demand block
• $87,500 — strong psychological support

Breaking these levels opened the path to the $84K–$86K range.

Global Impact: Not Just Crypto — Stocks Also Fell

The bond shock wasn’t isolated to crypto:

• US stock futures dipped
• Asian markets opened red
• Risk assets globally saw outflows

This confirms the move was macro-driven, not crypto-specific.

Investor Sentiment: Extreme Fear Returns

Market sentiment indicators flipped:

• Fear & Greed Index → Extreme Fear
• Social sentiment → sharply negative
• “Flight to safety” assets (gold, USD) saw higher flows

Short-term traders are cautious, but long-term holders appear unaffected.

What This Means for Bitcoin (Short Term)

1. Volatility Will Stay High This Week

Macro volatility rarely ends in one session. Bond markets tend to stabilize over multiple days.

2. BTC May Retest the $84,000–$86,000 Range

If global markets stay risk-off, this zone becomes a likely retest.

3. Relief Bounce Possible — But Temporary

Expect relief rallies, but not a full reversal unless macro pressure eases.

What This Means for Crypto as a Whole

Altcoins Are More Vulnerable

Historically, altcoins fall 2–3x faster than Bitcoin during macro shocks.

Today’s data already shows heavier losses in:

• ETH
• BNB
• XRP
• Top DeFi assets

DeFi & Infrastructure Holding Strong

Interestingly, despite the sell-off, DeFi systems are functioning smoothly — a sign of maturing market architecture.

December 2025 Outlook: What to Watch Next

The next 1–2 weeks will depend on three external factors:

1. Bond Yield Stability in Japan and the US

If yields cool, crypto stabilizes quickly.

If they rise again, more downside is possible.

2. Liquidity Conditions

Watch open interest:

If it rebuilds too fast, another liquidation event is possible.

3. Investor Flows Into ETFs

Any inflows into spot ETFs may act as a buffer.

Key Takeaways

• Bitcoin’s drop below $87K was triggered by Japan’s bond yield shock, not internal crypto weakness.
• Over $500M in liquidations worsened the sell-off.
• Altcoins are experiencing deeper pain.
• The broader global market is risk-off — affecting stocks too.
• Expect short-term volatility and possible retests of lower support zones.
• Long-term fundamentals remain intact; this is a macro liquidity event, not a structural crypto failure.

See all our insights: Bitcoin World News