Bitcoin saw a steep drop in early Asian trading on Monday, sliding to $85,500 as rising expectations of a December rate hike by the Bank of Japan (BOJ) added pressure to the market.
Key takeaways:
- Bitcoin fell 5% to nearly $85,000 in a broad market correction, triggering $656 million in long liquidations.
- Rising expectations of a BOJ rate hike at its Dec. 18–19 meeting added further downward pressure on BTC.
- A developing bear flag pattern now points to a potential drop toward $67,700.
Bitcoin sinks as liquidity gets wiped out
BTC slid to $85,616 on Monday, down 5.5% over the past 24 hours, as the broader market pulled back.
The drop extends Bitcoin’s decline to 32% from its Oct. 6 all-time high of $126,000 and came alongside a wave of forced liquidations in the derivatives market.
More than $564.3 million in long positions were liquidated, including $188.5 million tied to Bitcoin. Ether saw the second-largest hit with $139.6 million in long liquidations.
In total, roughly $641 million in long and short positions were flushed from the market, as illustrated in the chart below.
Several analysts link the latest downside to rising expectations that the BOJ will hike rates at its Dec. 18–19 meeting. The prospect of Japan’s first tightening move since January has heightened fears of an unwinding of the yen carry trade, putting pressure on risk assets — including crypto.
“$BTC dumped because the BOJ put a December rate hike in play,” BitMEX co-founder Arthur Hayes wrote on X Monday, adding that a USD/JPY range between 155 and 160 “makes the BOJ hawkish.”
Japanese bond yields are surging — with the two-year hitting its highest level since 2008 — and the yen is strengthening, Coinbureau co-founder and CEO Nic noted in a recent X post.
Because of this shift, “bond investors now assign a 76% probability to a BoJ rate hike on Dec. 19,” he wrote, adding:
“An increase in Japanese base rates and strengthening of Yen leads to an unwind of the carry trade (borrowing in Yen, buying risk assets). ”
A Reuters survey found that 53% of economists now expect the BOJ to raise rates — a sharp increase from previous months — driven by concerns over imported inflation and diminishing political pressure to maintain easy policy. On-chain prediction markets reflect similar sentiment: Polymarket traders currently see a 52% chance of a 25-basis-point hike on Dec. 19.
A stronger yen resulting from higher rates makes carry trades more expensive, triggering broad position unwinding. That dynamic can pressure risk assets, as seen in August 2024 when an unexpected BOJ hike sparked a 20% Bitcoin plunge to $49,000 and wiped out $1.7 billion in leveraged positions.
How low could Bitcoin fall?
The Bitcoin liquidation heatmap indicates that Monday’s drop cleared out liquidity near $86,000, with substantial buy-side liquidity still stacked between the current spot level and roughly $79,600.
This indicates that Bitcoin may still drift lower to absorb the remaining liquidity before any meaningful rebound.
Technically, BTC has broken below the lower boundary of its bear flag pattern at $90,300, confirming the setup’s bearish bias. A daily close beneath this threshold would signal further downside momentum, opening the door to the pattern’s measured target near $67,700 — close to the 2021 all-time highs. Such a move would represent a roughly 21% decline from current levels.
Veteran trader Peter Brandit shared a chart showing that Bitcoin’s macro downtrend could find support within the lower green zone, which lies between $45,000 and $70,000.
As previously noted, Bitcoin’s price action in 2025 has mirrored its 2022 bear-market pattern with nearly perfect correlation. If this analogue continues to hold, a meaningful recovery may not materialize until well into the first quarter of next year.
