Bitcoin Crashes Below $87K: BOJ Rate Hike Sparks Yen Carry Trade Chaos and Global Selloff

Bitcoin Plunges on Japan’s Policy Shock

Bitcoin tumbled below $87,000, hitting lows around $84,000-$86,000 during Asian trading on December 1, 2025, erasing nearly $150 billion from the total crypto market cap. This sharp 5-8% drop extended a brutal two-month slide, with BTC down over 30% from its October peak near $126,000. Bank of Japan Governor Kazuo Ueda’s hints at a December rate hike during a Nagoya speech fueled the panic, pushing traders to price in 76-87% odds of tighter policy.

Yen Carry Trade Unwinds: The Hidden Trigger

The yen carry trade—borrowing cheap yen to chase high-yield assets like crypto and US stocks—faced sudden reversal as Japan’s bond yields spiked. The 2-year JGB yield hit 1.01%, a post-2008 high, while the 10-year reached 1.86%, signaling higher borrowing costs worldwide. Analysts like Nic Puckrin from The Coin Bureau declared the unwind underway, with BitMEX co-founder Arthur Hayes warning a stronger yen cuts “fuel for the casino.”

Key impacts include:

Over $643 million in crypto liquidations, hitting 218,844 traders.
Long Bitcoin positions wiped out for $186 million; Ethereum for $138 million, dropping ETH to ~$2,800.
Thin order books amplified the rout after a low-volume November, BTC’s worst month with 16-18% losses.

Broader Market Ripples and Stock Declines

US stocks retreated in sympathy, with S&P 500 down 0.5%, Dow Jones 0.9%, and Nasdaq 0.4%. Crypto stocks suffered heavily, MicroStrategy plunging 11% amid the risk-off mood. This mirrors August 2024’s BOJ-induced turmoil, raising fears of a deeper BTC correction to $80,000 if rates rise December 18-19.

On-chain data shows long-term holders slowing accumulation, leaving retail buyers at “distressed levels” as BTC tests short-term holder cost basis support in the mid-$80,000s.

What’s Next for Bitcoin Traders?

Watch $88K-$90K as critical resistance; failure could target low-$80,000s amid yen strength and global liquidity squeezes. Fed rate cut bets (87% odds for December) offer some counterbalance, but Japan’s shift dominates. Expat investors in France should monitor EUR/JPY pairs for carry trade echoes in forex.