Crypto prices today have slid further as pressure from Japan’s bond market flowed into digital assets.
Summary
- Total crypto market value slipped 5% as BTC, ETH, XRP, and BNB extended their decline.
- Japan’s surging bond yields and the fading yen carry trade triggered heavy liquidations and renewed risk aversion.
- Traders are watching the BOJ’s mid-December decision, which could deepen risk-off mood if rates rise.
The total crypto market cap slipped by 5.3% to just above $3 trillion, adding to the weak momentum that has carried into December. At press time, Bitcoin was down 1.2% to $85,945 while Ethereum fell 1.5% to $2,812. XRP dipped 1.6% to $2.01, and BNB eased 0.9% to $828.
Bitcoin is now roughly 30% below its early October peak above $126,000, following a 21% decline in November that marked its steepest monthly drop since 2022. Sentiment has softened further with the Crypto Fear & Greed Index slipping one point to 23, which keeps the market in extreme fear.
Fresh data from CoinGlass shows liquidations of $536 million in the past 24 hours, with long positions accounting for most of the losses. The total crypto market open interest has fallen by 0.66% to around $124 billion, and the average relative strength index sits near 36, which shows a market struggling to form support.
BOJ tightening is driving the sell-off
The latest drop has been shaped by fast-rising Japanese bond yields and a clear shift in tone from the Bank of Japan.
Japan’s 10-year government bond yield has reached 1.877%, the highest reading since 2008. The 2-year yield touched 1% for the first time since before the global financial crisis. Investors took the moves as proof that Japan is stepping away from decades of softer policy.
This shift has put heavy pressure on the yen carry trade. The strategy has been widely used for years because borrowing in yen has been extremely cheap. Traders then moved that liquidity into higher-returning assets, including cryptocurrencies.
Estimates place the size of the trade in the trillions. When yields rise and the yen strengthens, those positions become harder to hold. Sudden yen appreciation often leads to margin calls and forced selling across risk assets. Analysts following the trade say a sharp move in yields could unwind billions in crypto exposure within a single day.
A fragile backdrop for risk assets
Conditions in global markets have added more stress to crypto. Bitcoin’s correlation with the Nasdaq and the S&P 500 pulled it lower as equities weakened. Concerns around debt exposure at fast-growing AI firms, along with China’s tightening rules on digital assets, have also weighed on risk appetite.
The tone worsened further after S&P cut its stability rating for Tether’s USDT to the lowest tier. Signs of strain appeared in offshore markets where USDT traded below its reference rate in China.
Traders are now watching the Bank of Japan’s mid-December meeting. A firm message about a near-term rate hike would likely push yields higher again and increase pressure on the crypto market.
Markets are also pricing in a Federal Reserve rate cut. A combination of a BOJ hike and Fed easing would narrow the gap between U.S. and Japanese rates and could extend the fourth quarter slide in digital assets.
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