Bitcoin fell below the 86000 USD mark, reaching a low of 85604. There are greater hidden dangers behind this wave of decline.

The actions of the Bank of Japan are truly the real trigger. The probability of a rate hike in December has soared to 76%, and in January it is as high as 90%. The attitude of the governor is already very clear, with government bond yields reaching a new high since 2008, and inflationary pressures along with the depreciation of the yen leave Japan with no choice.

The key issue lies in carry trades. Over the past few years, a large amount of capital has borrowed at the ultra-low interest rates of the yen and has turned around to invest in dollar assets—cryptocurrencies and US stocks are both popular targets. Now that interest rate hikes have taken effect, borrowing costs have risen sharply, and this capital must sell off its assets to buy back yen to repay debts. With a volume of $14 trillion, such a scale of capital return will directly drain global liquidity.

The chain reaction has begun to manifest. Carry trades are being closed, liquidity is tightening, and cryptocurrencies are being sold off first. With risk aversion rising, funds are shifting towards bonds and other traditional assets, causing Bitcoin's digital gold narrative to lose its appeal in this environment.

In the last 24 hours, mainstream coins have fallen by more than 5%, and the total liquidation amount across the network has exceeded 400 million USD. Looking back at November, BTC dropped from 126000 to 80000, with a decline of over 20%. ETFs saw an outflow of 3.5 billion in a single month, and the peak liquidation in one day reached 900 million. Now, leveraged long positions are being liquidated, whale addresses are showing selling signals, and technical indicators are showing a death cross. Any negative news could trigger a sell-off.

Don't think about bottom fishing in the short term. Before the Bank of Japan's monetary policy meeting on December 18-19, market volatility will only intensify. The medium-term trend depends on the Federal Reserve's attitude; if they cut rates in December, it may lead to a rebound, but if they keep rates unchanged, it will be a double blow. In the long term, there's no need to panic excessively; after the interest rate hike cycle in 2024, BTC reached a new high within three months, but the premise is that you must survive first.

Key time nodes: December 18-19, Bank of Japan meeting, mid-December Federal Reserve interest rate decision, high probability of Bank of Japan raising interest rates again in January 2026. Controlling your position during this period is more important than anything else, don't go all in.