ATTENTION π¨
JAPAN CAUSED THE #BITCOIN FLASH CRASH π±
Yesterday, $BTC plummeted by more than $4,000 in just one hour, and the crypto market lost around $150 billion in capitalization.
In addition, more than $600 million in leveraged positions were liquidated.
π₯ What triggered the crash?
π―π΅ The Bank of Japan (BOJ) abruptly shifted from a βcalmβ message to a 76% probability of raising interest rates on December 19.
As a result, the yield on 2-year Japanese bonds rose to 1.84%, its highest level since 2008.
β οΈ Why does this affect #Bitcoin and the crypto market?
πΉ Japan maintained interest rates at 0% for decades
πΉ This allowed for massive yen-denominated loans, exceeding $20 trillion
πΉ Investors used these cheap yen to invest in higher-yielding assets β Yen Carry Trade
π If Japan raises interest rates, the carry trade breaks down.
Investors reduce risk, sell assets, buy back yen, and this puts pressure on global markets, including crypto.
π€ Bitcoin fell to around $85,000 following speculation of a rate hike by the Bank of Japan in December.
π₯ The pullback liquidated $656 million in long positions and reflects the crypto market's sensitivity to international monetary policies.
π―π΅ Expectations of a weaker yen, coupled with higher yields on sovereign bonds, are driving the adjustment in risk assets like Bitcoin.
Bitcoin has confirmed the LPSY (Last Point of Supply), which is basically a retest of the 93k resistance area. At this level, buying power has dried up while selling pressure is taking over, leading to a strong sell-off. The next target is the short-term bottom at 81k, and if the drop continues, it could reach 75k
$140,000,000,000 removed from the crypto market capitalization in the last 4 hours.
