Bitcoin price suffered a harsh reversal on Monday, wiping out some of the gains made last week when it soared to $93,000.
Key Takeaways
- •Bitcoin price dived below the important support at $85,000.
- •The Bank of Japan’s central bank governor indicated a potential rate hike.
- •A rate hike by the Bank of Japan while the Federal Reserve is cutting rates could lead to the unwinding of carry trades.
Bitcoin (BTC) token dived to $84,880, triggering a broader crypto market crash that affected most altcoins. The market capitalization of all coins dropped by approximately 8% to $2.9 trillion.
Bank of Japan Signals Potential Rate Hike
One potential reason for Bitcoin's price crash is a sudden shift in stance from the Bank of Japan. In a statement, Kazuo Ueda, the bank’s governor, said that the bank will consider the pros and cons of raising interest rates by examining the economy, inflation, and the financial market both domestically and internationally.
As a result of this announcement, the Japanese yen rebounded, while government bond yields rose, with the 10-year hitting a multi-decade high of 1.876%. Consequently, the Nikkei 225 and Topix indices experienced a dip.
A Bank of Japan rate hike will be particularly notable because it is expected to occur while the Federal Reserve is cutting interest rates. This divergence in monetary policy could push investors to unwind their carry trades, a phenomenon that occurred last year when the Bank of Japan began to hike interest rates.
In July 2024, the Fed cut rates while the BOJ raised rates, leading to the unwind of the carry trade.
— Benjamin Cowen (@intocryptoverse) December 1, 2025
Bitcoin capitulated into it, and found a low 1 week later.
Good chance this happens again on December 10th (Fed cuts, BOJ raises rates).
So maybe Bitcoin finds a low mid-Dec? pic.twitter.com/Vd6d3k3fUh
The actions by the Bank of Japan are significant given its position as the second-biggest central bank globally in terms of assets. It holds over $5.8 trillion in assets, second only to the Federal Reserve, which manages $5.14 trillion.
Other Contributing Factors to Bitcoin's Decline
Bitcoin price is also falling as market participants adjusted their positions following last Friday’s options expiry, which involved over $13 billion. It is common for the cryptocurrency to experience increased volatility before and after such significant expiry events.
Additional factors contributing to the BTC price crash include rising liquidations and outflows from exchange-traded funds.
Bitcoin Price Technical Analysis
The BTC price has been in a downtrend since forming a double top at $124,630, with a neckline identified at $107,270. A double top is a typical bearish reversal pattern.
The cryptocurrency has formed a series of lower lows and lower highs. It also formed a death cross, a pattern where the 50-day and 200-day moving averages cross, indicating a potential bearish trend.
On a more positive note, there are signs that the coin is forming a double-bottom pattern at $80,637, with a neckline at $93,065. Therefore, the coin may still rebound as long as it remains above the established double-bottom support level at $80,637.