Bitcoin Price Drop: The Impact of Interest Yields on Japanese Government Bonds

The price of Bitcoin After a brief period of consolidation, rising to around $93.000, the cryptocurrency has again fallen back towards $85.000. On Monday, the cryptocurrency saw a significant 7% drop, according to CoinGecko data. This movement has largely captivated investors and market analysts.

The Influence of Japanese Government Bonds

Market expert Shanaka Anslem points to a major culprit for this price drop: Japanese government bonds. In a recent post on the social media channel X (formerly Twitter), he noted that the yield on Japan’s 10-year government bonds soared to a whopping 1,877 percent on December 1, 2025 — the highest level since June 2008. The 2-year yield also hit 1 percent, a level not seen since the fall of Lehman Brothers.

These rising returns have led to a dramatic unwinding of what Anslem calls the largest arbitrage trade in history: the yen carry trade. With an estimated total size of around $3,4 trillion, with some estimates reaching as high as $20 trillion, global investors have previously been able to use cheap Japanese yen to buy various assets, including stocks, U.S. Treasuries, and cryptocurrencies like Bitcoin. However, it appears that those days are now over.

The mechanisms behind these developments are simple yet impactful. As yields rise, the yen strengthens, squeezing the profitability of leveraged positions (valued with borrowed capital). Anslem explains that this dynamic triggers a chain reaction: sales lead to margin calls (invitations for additional coverage), which in turn trigger further liquidations. On October 10, a staggering $19 billion in crypto positions were liquidated, a comment that underscores the significance of this launch.

Where Is the Bitcoin Price Going?

This Bitcoin price decline comes amid increasing correlations with major stock indices, with a 46% correlation with the Nasdaq and 42% with the S&P 500. Anslem notes that what was once seen as an “uncorrelated hedge” is now an indicator of global liquidity conditions, with all the implications that entails.

Nevertheless, there are interesting developments taking place. During this price pressure, whale investors have invested as much as 375.000 BTC gathered, while miners significantly reduced their sales—from 23.000 BTC monthly sales to just 3.672 BTC. This offers a contrasting view of market dynamics, where trading can fluctuate between fear and strategy.

Looking ahead, Anslem points to a crucial moment approaching: the Bank of Japan's policy decision on December 18th. If the bank decides to raise interest rates and signals further increases, it could mean the Bitcoin price tests the $75.000 mark, which would represent an additional 11% drop from current trading levels.

Frequently Asked Questions

What are the direct causes of Bitcoin's recent price drop?
Bitcoin's recent decline is primarily due to rising Japanese government bond yields, leading to a reduction in the yen carry trade. This has impacted market liquidity and triggered a chain reaction of selling.

How do market correlations affect Bitcoin's price?
Bitcoin's increasing correlation with stock indices like the Nasdaq and the S&P 500 suggests that Bitcoin is increasingly seen as a risky asset sensitive to global liquidity changes.

What can investors expect from the Bank of Japan on December 18?
If the Bank of Japan decides to raise interest rates, it could put additional pressure on Bitcoin's price, potentially leading to a drop to the $75.000 level, which could have significant implications for the broader crypto market.