On December 15, BTC fell to the $85,000 level, continuing its recent decline. The pressure intensified amid a combination of global macro risks, unwinding of leveraged positions, and low market liquidity.
In just a few days, more than $100 billion was wiped from the total crypto market capitalization. This again raised the question of whether the sell-off was over or if the decline could continue.
Although there was no single trigger for the move, several factors simultaneously weighed on the price of bitcoin. These same reasons may continue to hold back the market in the near future.
Markets were spooked by a Bank of Japan rate hike
The main macro factor came from Japan. Markets began to price in an expected rate hike by the Bank of Japan, which could happen as soon as this week. In this case, the rate would rise to levels the country has not seen in decades.
Even a small increase matters. Japan has long fueled global risk markets through the so-called yen carry trade strategy.
For years, investors borrowed cheap yen and funneled this money into riskier assets, including stocks and cryptocurrencies. As rates rise in Japan, this scheme begins to unwind. Investors sell risky assets to close yen obligations.
Bitcoin has already reacted sharply to previous Bank of Japan rate hikes. In the last three cases, the price of BTC fell in the range of 20% to 30% within several weeks after the decision. Traders began to factor in this historical scenario in advance, which increased pressure on BTC even before the actual decision.
US statistics brought back uncertainty around Fed policy
At the same time, traders began to reduce risk ahead of a major block of US macro data. This refers to inflation and labor market indicators, which could soon set a new direction for markets.
The Fed recently cut rates, but made it clear that it is not in a hurry to ease further. This is important for bitcoin, as it has recently behaved more like a liquidity-sensitive asset rather than a separate safe haven.
US inflation remains above target levels, and labor market data is expected to start weakening. Against this backdrop, it has become more difficult for markets to assess the Fed’s next move. Uncertainty has reduced speculative demand and pushed short-term traders to take a wait-and-see approach.
As a result, bitcoin began to lose momentum just as it approached important technical levels.
Mass liquidations with leverage accelerated the drop
Bitcoin’s movement was largely determined by the situation in the derivatives market. Over a short period, there were mass liquidations of leveraged positions.
According to trading platforms, in just a few hours, more than $200 million in long positions were closed. Before this, the market was overloaded with bullish bets after the recent Fed decision.
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As the price fell, liquidations occurred automatically. The closing of some positions led to new sales and increased pressure.
As a result, the decline happened in a short time frame and without attempts at stabilization from the demand side.
Crypto market liquidations on December 15. Source: Coinglass
Low weekend liquidity intensified price swings
The timing of the sell-off played a role and exacerbated the move.
Bitcoin began to decline during weekend trading, when liquidity is usually lower and order books are thinner. In such conditions, even relatively small sell orders can sharply move the price.
Large holders and derivatives market participants began to reduce positions in weak liquidity conditions, which increased volatility. This factor helped push bitcoin’s price from just below $90,000 to $85,000 in a short period of time.
Such weekend breakdowns often look especially dramatic, even if the market’s fundamental picture remains largely unchanged.
BTC price dynamics. Source: CoinGecko
BTC sales by Wintermute increased spot market pressure
Additional tension in the market structure was created by large-scale sales by Wintermute, one of the largest market makers in the crypto industry.
During the sell-off, on-chain data and market statistics showed that Wintermute was actively sending large volumes of BTC to centralized exchanges. The total sales volume is estimated at more than $1.5 billion. Reportedly, the company was selling BTC to rebalance risks and cover positions after recent volatility and losses in derivatives markets.
Since Wintermute provides liquidity on both spot and derivatives platforms, its actions had a disproportionately strong impact on the market.
Wintermute sends BTC to centralized exchanges. Source: Arkham
The timing of these sales was also important. Wintermute was active during a period of low liquidity, which intensified the downward move and accelerated bitcoin’s drop toward the $85,000 level.
What happens next
BTC’s further movement now depends not on crypto market news, but on the macro background.
If the Bank of Japan confirms a rate hike and global bond yields rise, pressure on BTC may persist. In this scenario, the unwinding of carry trades will continue, and a strengthening yen will amplify this effect.
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But if the market has already fully priced in this decision, and US data turns out weaker than expected and brings back talk of rate cuts, BTC may stabilize after the wave of liquidations ends.
At the moment, the December 15 sell-off looks like a macro reset rather than a sign of problems within the crypto market itself. However, it is too early to expect volatility to disappear quickly.
