Bitcoin slipped below $85,000 overnight, triggering nearly $600 million in liquidated long positions across crypto markets within 24 hours as expectations mounted that the Bank of Japan will hike interest rates this week.
As of press time, Bitcoin recovered slightly to around $86,000. The drop wiped out $218.7 million in Bitcoin long positions and $213 million in Ethereum longs, with Coinglass data showing more than $200 million in liquidations concentrated within roughly an hour as the price fell toward $86,700.
Market reports linked the selloff to renewed fears that the BoJ will tighten monetary policy at its meeting this week, threatening the yen carry trade that funds risk assets.
When the BoJ raises rates, investors who borrow yen at low rates to purchase higher-yielding assets must unwind positions. Previous BoJ tightening moves have coincided with sharp Bitcoin drawdowns.
Bitcoin held above $90,000 through much of December, but once the price broke that level, spot selling accelerated, and derivatives liquidations cascaded through thin order books.
Macro headwinds compound selloff
Bitcoin drifted lower throughout December on weaker risk appetite stemming from the Federal Reserve's Dec. 10 meeting, where the central bank cut rates but signaled only limited easing in 2025.
Bitcoin's weakness is tied to a “sell-the-news” reaction, with traders de-risking after the Fed maintained a hawkish forward outlook.
Tech and AI stocks declined on disappointing earnings, cooling the high-beta trade that lifted crypto alongside speculative equities.
Spot Bitcoin ETF flows also moderated last week, amounting to $286.6 million in net inflows. Despite maintaining consecutive weekly net inflows, capital flows are not keeping pace with the consistent demand that supported the price through much of 2025.
The selloff extended across major altcoins. Ethereum traded at $2,921.81, down 4.6% in 24 hours. Solana fell 3.3% to $125.05, XRP dropped 4.9% to $1.8822, BNB declined 3.5% to $846.29, Cardano shed 4% to $0.3807, and Dogecoin fell 4.6% to $0.1278.
When Bitcoin broke below $90,000, leveraged positions built during the prior rally became vulnerable.
Long positions got stopped out in waves as the price moved through support levels, with each round of forced selling triggering additional liquidations. Thin liquidity during Asian trading hours amplified the move.
The next hours will be key to determining whether Bitcoin can reverse the leverage-driven crash.
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