Bitcoin (BTC) experienced a sharp pullback in early Asian trading on Monday, dropping to $85,500 amid increasing expectations of a December rate hike by the Bank of Japan (BoJ).
Key takeaways from the market correction include:
- •Bitcoin dropped 5% to $85,000, liquidating $656 million in long positions.
- •Mounting expectations for a BoJ rate hike at its December 18-19 meeting weighed down on the BTC price.
- •Bitcoin's bear flag pattern projects a potential drop to $67,700.
Bitcoin Wipes Out Liquidity in Tumble to $85,000
The BTC price fell as low as $85,616 on Monday, down 5.5% in the past 24 hours, amid a broader market retreat. This extended the drawdown from the October 6 all-time high of $126,000 to 32% and was accompanied by massive liquidations across the derivatives market.
More than $564.3 million in long positions were liquidated, with Bitcoin accounting for $188.5 million of that total. Ether (ETH) followed with $139.6 million in long liquidations. Across the board, a total of $641 million was wiped out of the market in short and long positions.
Several analysts attribute the downside to surging expectations for a BoJ rate hike at its December 18-19 meeting. This potential tightening—Japan’s first since January—has amplified concerns about unwinding the massive yen carry trade, pressuring risk assets such as cryptocurrencies.
“$BTC dumped cause BOJ put Dec rate hike in play,” said BitMEX co-founder Arthur Hayes in an X post on Monday, adding that a USD/JPY rate of between 155 and 160 “makes BOJ hawkish.”
“Japanese yields are spiking with the 2-year at its highest level since 2008. The Yen is also surging,” said co-founder and CEO Coinbureau Nic in his latest post on X. As a result, “bond investors place a 76% chance of a BoJ rate hike on Dec. 19,” Nic 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 poll shows that 53% of economists expect a hike, up from prior months, driven by risks of imported inflation and fading political pressure for easing. Polymarket bettors now project a 52% chance of a 25 basis point increase at the December 19 meeting.
A stronger yen from higher rates makes carry trades costlier, prompting investors to unwind positions en masse. This forces the sale of risk assets, as seen in August 2024, when a surprise BoJ hike triggered a 20% BTC price crash to $49,000 and $1.7 billion in liquidations.
How Low Can Bitcoin Price Go?
The Bitcoin liquidation heatmap showed the price eating away liquidity around $86,000, with millions in bid orders still sitting between the spot price and $79,600.
This suggests that Bitcoin’s price might drop further to sweep this liquidity before staging any recovery.
From a technical perspective, the price has validated a bear flag on the daily chart after dropping below the lower boundary of the flag at $90,300 on Monday. A daily candlestick close below this level will confirm the continuation of the downtrend toward the measured target of the flag at $67,700, which is near the 2021 all-time highs. Such a move would bring the total losses to 21%.
Not to bust anyone's banana, but the upper boundary of the lower green zone starts at sub $70s with lower boundary support in the mid $40s.
— Peter Brandt (@PeterLBrandt) December 1, 2025
How soon before Saylor's Shipmates ask about the life-boats? $BTCpic.twitter.com/YLfjSDdw9H
Veteran trader Peter Brandt 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 Cointelegraph reported, Bitcoin is following the 2022 bear market trajectory so far, with a near 100% correlation in 2025. The true BTC price rebound may not occur until well into the first quarter of next year if this trend continues.