Summary: Bitcoin continues its downward spiral, dropping to around $85,600, while Ethereum falls below the $3,000 mark. The broader cryptocurrency market, including key stocks like Strategy and Circle, has also faced significant pressure. This ongoing decline is primarily driven by macroeconomic factors, including the Bank of Japan’s interest rate hike expectations, uncertainty surrounding the Federal Reserve’s future rate cuts, and systemic de-risking by long-term holders, miners, and market makers. This article explores the primary reasons for Bitcoin’s price drop and why this may not be the ideal time for a market rebound.
TL;DR:
Yen Rate Hike: The Bank of Japan’s expected rate hike is the primary catalyst for Bitcoin’s recent price drop. Historical data shows that Bitcoin tends to fall by 20% to 30% within 4–6 weeks following a yen rate hike.
Uncertainty Around Federal Reserve Rate Cuts: Despite the Fed’s recent rate cut, there is significant uncertainty regarding future rate cuts, especially with upcoming macroeconomic data like the U.S. nonfarm payroll and CPI reports.
Miners Shutting Down and Long-Term Holders Selling: Data from on-chain analytics indicates that Bitcoin miners are under increasing pressure to sell, contributing to market volatility. Miners shutting down operations and long-term holders reducing their positions have added to the downward pressure.
Global Macroeconomic Divergence: With central banks around the world adopting different monetary policies—Japan tightening while the U.S. remains uncertain—the liquidity environment has become more unpredictable, contributing to Bitcoin’s volatility.
Yen Rate Hike: The “Domino Effect” on Global Markets
The Bank of Japan’s rate hike expectations are a major driver behind Bitcoin’s recent decline. Historical trends show that Bitcoin tends to drop by 20% to 30% in the 4–6 weeks following past Bank of Japan rate hikes. In fact, Bitcoin fell by approximately 30% after the Japanese rate hikes in March 2024, July 2024, and January 2025.
Why does a rate hike by the Bank of Japan have such a significant impact on Bitcoin? Japan is the largest foreign holder of U.S. Treasuries, and its monetary policies directly affect global capital flows. Over the years, investors have borrowed yen at low interest rates and used the funds to invest in riskier assets, including Bitcoin. When Japan raises interest rates, these positions may need to be unwound, triggering forced liquidations and de-leveraging across global markets—especially in risk assets like Bitcoin.
This time, Japan’s rate hike marks a shift from a prolonged period of low interest rates. Markets have already priced in the rate hike, and Bitcoin’s price has already reacted. However, if the Bank of Japan continues to raise rates or begins selling off its large ETF holdings, it could create further turbulence in global markets, including additional pressure on Bitcoin.
Uncertainty Around Federal Reserve Rate Cuts
While the Federal Reserve has made its first rate cut, uncertainty surrounds the pace and extent of future rate reductions. The market is now focused on whether the Fed will slow the pace of rate cuts or adjust its policy stance, particularly after the release of critical U.S. economic data—such as the nonfarm payroll and CPI reports.
If U.S. employment and inflation data show signs of weakening, the Fed may become more cautious about cutting rates further, leading to heightened market uncertainty. This lack of clarity on the Fed’s future actions could be more damaging to Bitcoin’s price than a clear tightening or easing policy. Investors may pull back on riskier assets like Bitcoin due to the unpredictability of liquidity conditions.
In addition, the divergence in global monetary policies—Japan tightening while the U.S. remains uncertain—has further complicated the global liquidity environment. This “uneven liquidity environment” often proves to be more destabilizing for Bitcoin than any single tightening or easing policy.
Miners Shutting Down and Long-Term Holders Selling
Beyond macroeconomic factors, another key driver of Bitcoin’s price decline is the behavior of miners and long-term holders. On-chain data reveals that miners are increasingly under pressure to sell off their Bitcoin holdings. The combination of declining Bitcoin prices and rising operational costs has led many miners to shut down their operations, further exacerbating the downward price movement.
Additionally, long-term holders—also known as “OGs”—are also selling off their Bitcoin positions. Data from Glassnode indicates that Bitcoin holders who haven’t moved their coins in over six months have been steadily reducing their positions since late 2024, with a noticeable acceleration in sales during November and December 2025.
This selling trend has been compounded by significant inflows of Bitcoin into exchanges, with more than 3,764 BTC entering the market on December 15 alone. This signals that large holders are preparing to sell their positions, further weighing on Bitcoin’s price.
Global Macroeconomic Divergence and Liquidity Pressures
The global macroeconomic environment is increasingly fragmented, with different central banks adopting contrasting policies. While Japan is raising interest rates and tightening liquidity, the U.S. remains hesitant about further rate cuts, and the European Central Bank and Bank of England are still holding onto their respective policies. This divergence is creating a complicated liquidity situation for global markets, including Bitcoin.
For Bitcoin, this lack of uniform monetary policy adds to market instability, especially when liquidity becomes scarce. The uncertainty surrounding global liquidity conditions may continue to make Bitcoin and other risk assets particularly volatile in the short term.
Conclusion: Why It’s Not the Right Time to “Buy the Dip”
The recent decline in Bitcoin’s price is driven by a complex combination of macroeconomic factors—namely Japan’s rate hike, uncertainty surrounding U.S. Federal Reserve policy, and a growing trend of miner and long-term holder sell-offs. These factors have created a perfect storm for Bitcoin, leading to continued downward pressure on its price.
For investors, this is not the ideal time to “buy the dip” as the market continues to face significant macroeconomic uncertainties and selling pressure from miners and institutional holders. The potential for further declines remains high, and a clearer understanding of global liquidity conditions and central bank policies is necessary before any meaningful rebound can occur.
In summary, the combination of global economic divergence, uncertain Federal Reserve actions, and selling pressure from both miners and long-term holders means Bitcoin is likely to remain under pressure in the near term. Investors should stay cautious and watch for clearer signals before making any significant moves in the cryptocurrency market.
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