Bitcoin’s price fell sharply in early Asian trading on Monday. It dropped to around $85,500. This represents a decline of over 5% in a single day. The drop triggered significant liquidations in the cryptocurrency derivatives market. Over $656 million in leveraged long positions were wiped out, with Bitcoin accounting for nearly $190 million of that total.
The sell-off appears linked to shifting expectations for Japanese monetary policy. Traders are increasingly anticipating an interest rate hike from the Bank of Japan at its meeting on December 18-19. This expectation is causing the Japanese Yen to strengthen. A stronger Yen makes a popular investment strategy, known as the “carry trade,” more expensive to maintain.
In a carry trade, investors borrow in a low-interest currency like the Yen to buy higher-yielding risk assets, including cryptocurrencies. As the cost of borrowing Yen rises, investors unwind these trades. This forces them to sell assets like Bitcoin, creating downward pressure on its price. A similar event in August 2024 led to a 20% crash in Bitcoin’s value.
From a technical analysis perspective, Bitcoin’s chart shows a concerning pattern. The price has broken below what analysts call a “bear flag” formation. This breakdown suggests the current downtrend could continue. The measured target for this pattern points to a potential drop toward $67,700. That level is near Bitcoin’s all-time high from 2021.
Liquidation heatmaps, which show where large clusters of stop-loss orders are placed, indicate more selling pressure may lie ahead. Significant bid orders are stacked between the current price and the $79,600 level. The price may fall further to “sweep” this liquidity before any recovery can begin.
Some veteran traders note that Bitcoin’s macro downtrend could find major support in a broad zone between $45,000 and $70,000. The current market behavior is also drawing comparisons to the 2022 bear market. The price action in 2025 has shown a near 100% correlation with that period so far. If this pattern holds, a sustained price rebound may not materialize until well into the first quarter of next year.
