Have you ever watched what felt like an unstoppable rally just evaporate overnight? That was the crypto market on December 1st, 2025. One minute Bitcoin was teasing the $93,000 level most of us thought was the launchpad to six figures, and the next it was bleeding out below $85,000 like someone pulled the plug. The entire market cap shed close to 8% in hours. Altcoins got absolutely wrecked—some down 15% or more. And the question on every trader’s mind right now is brutally simple: did the Bank of Japan just light the fuse?
The Moment Everything Changed
It started with a few carefully chosen words from Kazuo Ueda, the Bank of Japan governor. Nothing explosive—just the usual central-banker speak about “examining the pros and cons” of another rate hike. But in this market, that was enough. The yen jumped, Japanese bond yields spiked to levels not seen in decades, and suddenly everyone remembered the summer of 2024 like it was yesterday.
You remember that one, right? The Fed started cutting rates while the BoJ surprised the world with its first hike in forever. The yen carry trade—the giant borrowing-in-yen-to-buy-anything-with-higher-yield trade—unraveled violently. Bitcoin went from $70k to $49k in a blink. History doesn’t repeat, but it sure rhymes, and right now the rhyme is getting loud.
Why the Yen Carry Trade Still Matters in 2025
Let me break this down the way I explain it to friends who still think crypto runs purely on memes and Elon tweets. The yen carry trade never really went away; it just got quieter after last year’s chaos. Japanese rates were still basically zero (or negative for a long time), so global funds kept borrowing cheap yen to buy higher-yielding assets—U.S. stocks, emerging market bonds, and yes, a massive chunk went into Bitcoin and crypto.
When the BoJ even whispers about tightening, the math flips. Borrowing in yen suddenly looks expensive. Repayment risk skyrockets. The rational move? Unwind positions fast, convert everything back to yen, and sit on cash until the dust settles. That’s exactly what the price action looked like today.
“In July 2024, the Fed cut rates while the BOJ raised rates, leading to the unwind of the carry trade. Bitcoin capitulated into it, and found a low 1 week later. Good chance this happens again on December 10th (Fed cuts, BOJ raises rates).”
– Benjamin Cowen, respected crypto analyst
That tweet aged like fine wine in about six hours.
But Was the BoJ the Only Trigger?
Look, I’m not here to defend central bankers—they move markets whether we like it or not—but giving the Bank of Japan 100% of the blame feels too easy. Several landmines were already primed.
- Massive options expiry last Friday—over $13 billion notional. These events always increase volatility before and after.
- Bitcoin ETFs saw their worst month of outflows since February. Roughly $3.5 billion left the system in November alone.
- Funding rates were stretched to the upside. Perpetual futures traders were paying insane premiums to stay long.
- Liquidation cascades: once BTC broke $90k, stop-losses triggered like dominoes.
So yes, the BoJ comments were the spark. But the market was a powder keg waiting for any excuse.
Reading the Charts: Where Technicals and Fundamentals Collide
Zoom out on the daily chart and the picture gets even more interesting. Bitcoin carved out what looks suspiciously like a double-top pattern around $108,000–$109,000 earlier this year. The neckline sat right at $107,270. We sliced through that like butter last month, but the measured move downside targets the low $80ks—exactly where we bounced twice already.
Now flip the script. Those two touches around $80,600–$81,000 are starting to look like a double-bottom. If we hold here, the upside target shoots toward $93,000 again pretty quickly. Classic battle between bears screaming “lower highs” and bulls pointing at higher lows on the weekly timeframe.
Personally? I’ve found that when macro and technicals line up this cleanly, it’s usually smart to respect both sides instead of picking a camp too early.
The December 10th Showdown Nobody’s Talking About (Yet)
Mark your calendar. December 10th could be one of the wildest days of the year for risk assets.
On one side you’ve got the Federal Reserve almost certain to deliver another rate cut—markets are pricing over 90% probability. On the other side, the Bank of Japan meets the same week, and Governor Ueda just spent the weekend reminding everyone they’re data-dependent and perfectly willing to hike if inflation cooperates.
Diverging monetary policy between the two largest central bank balance sheets on the planet? That’s the textbook recipe for carry-trade pain. We lived through round one in 2024. Round two might be even sharper because positioning is heavier this time around.
What Happens to Bitcoin if the Carry Trade Really Unwinds?
Short answer: it gets ugly before it gets better.
Last time we saw leveraged long liquidations cascade from $70k all the way to $49k in under two weeks. This cycle the leverage isn’t quite as extreme, but open interest is still massive and funding rates were euphoric just days ago.
The optimistic take—and yes, there is one—is that these flush-outs tend to mark intermediate lows. Capitulation is painful, but it clears out the weak hands. Remember August 2024? We bottomed exactly one week after the worst of the carry-trade panic and then ran 100% in three months.
Silver Linings and Realistic Expectations
Before you smash the sell button, consider a couple of things that are different this time:
- Spot ETF inflows (when they happen) are real demand, not leveraged futures gambling.
- Corporate treasury adoption continues quietly in the background—think MicroStrategy and others keep buying dips.
- The halving liquidity lag is still playing out. Historically, the real parabolic moves come 12–18 months post-halving.
- Global liquidity conditions outside Japan remain extremely accommodative.
In my experience, the worst part of these drawdowns is always the speed. The recovery usually feels painfully slow at first, then explodes when everyone has given up hope.
So… Buy the Dip or Wait It Out?
If you’re a long-term holder, today probably felt horrible but doesn’t change the thesis. If you’re trading leveraged or short-term, respect the momentum—there’s likely more pain before we stabilize.
Key levels I’m watching:
- $80,600–$81,000 – the double-bottom zone. Lose this convincingly and $70k comes into play fast.
- $88,000–$90,000 – first serious resistance on any bounce. Reclaiming this flips the short-term narrative.
- $93,000 – the make-or-break level for bulls. Clear that and the path to new highs opens again.
Whatever happens, one thing is crystal clear: the Bank of Japan just reminded everyone that crypto doesn’t live in a vacuum. Global macro still calls the shots when trillions are on the line.
Stay sharp, manage risk like your portfolio depends on it (because it does), and maybe—just maybe—keep some dry powder ready for when the storm passes. Because in this game, the best opportunities usually show up right after everyone swears it’s over.
