Bitcoin fell another 4% on Tuesday, with more than $1.8 billion in positions liquidated over the past 48 hours as markets reacted to tariff threats from US President Donald Trump and volatility in Japanese government bonds.
The price of Bitcoin dropped to $87,790 on Coinbase in late Tuesday trading, marking its lowest level since Dec. 31. Data from Coinglass shows that more than $1.8 billion in liquidations occurred over the past two days, with roughly 93% coming from long positions.
Bitcoin has now erased all of its gains for the year and is down about 10% from its year-to-date high of nearly $98,000. The price has also slipped below its 50-day exponential moving average (EMA), a technical level that previously supported the recent rally.
The broader crypto market has also taken a hit, losing around $225 billion in total value — the largest drop since mid-November. Total crypto market capitalization now stands at about $3.08 trillion.
Japanese bond turmoil or “Sell America” trade
According to Reuters, renewed tariff threats from US President Donald Trump have triggered a return of the so-called “Sell America” trade, similar to the market reaction seen after tariff announcements last April.
However, some analysts say the market turmoil may not be driven by tariffs alone. Dan Tapiero, founder and CEO of 50T Funds, said the sell-off was caused by severe stress in the Japanese bond market that is now spilling over into global markets.
Tapiero said the “wipeout” was driven by what he described as a “complete collapse” in Japanese bonds, adding that gold is likely to continue rising — after hitting a record high of $4,835 per ounce on Tuesday — with Bitcoin expected to follow.
US Treasury Secretary Scott Bessent echoed that view, saying markets are falling because Japan’s 10-year government bond experienced an extremely rare move over the past two days.
“I believe markets are going down because the Japanese 10-year bond market had a six-standard-deviation move,” Bessent said, adding that the sell-off had “nothing to do with Greenland.”
Japanese government bond yields surged sharply, with 10-year yields jumping nearly 19 basis points in two days. Meanwhile, 30-year yields saw their biggest one-day increase since 2003 as investors reacted to expectations of higher government spending and tighter liquidity, Reuters reported.
Global liquidity under pressure
Jeff Ko, chief analyst at CoinEx Research, told Cointelegraph that the spike in Japanese bond yields was driven by fiscal uncertainty and market volatility ahead of a snap election.
He warned that the move could speed up the unwinding of carry trades, which would further tighten an important source of global liquidity.
“Beyond the trade war, a capital war appears to be emerging,” Ko said.
“Fund flows are shifting away from US assets as geopolitical tensions mount. Bitcoin finds itself caught in a tug-of-war — while it shares characteristics with hard assets like gold, it’s currently being sold off due to its heightened sensitivity to liquidity conditions.”
