Bitcoin’s price dropped nearly 5% to below $85,000 in early Asian trading on December 1, erasing recent gains and wiping out around $150 billion in total digital asset market capitalization.
The decline followed a sharp rise in Japanese government bond yields, which triggered a broad risk-off sentiment and exposed the fragility of bitcoin’s low-volume market structure.
Thin liquidity amplifies decline
According to 10x Research, the week leading up to the selloff featured some of the lowest bitcoin trading volumes since July.
Average weekly volumes fell to $127 billion, with bitcoin volumes specifically down 31% to $59.9 billion.
This created thin order books that could not absorb institutional selling, turning a routine price correction into a significant liquidity event. Timothy Misir, head of research at BRN, described it as:
“not a measured correction… a liquidity event driven by positioning and macro repricing.”
Leverage and liquidations
The steep price move led to nearly 220,000 traders being liquidated, totaling $636 million in losses.
Macro triggers from Japan
The immediate catalyst was Japan’s 10-year government bond yield rising to 1.84%, its highest since 2008, and the two-year yield surpassing 1%.
As Arthur Hayes, co-founder of BitMEX, noted, the Bank of Japan has “put a December rate hike in play,” strengthening the yen and raising the cost of capital for global speculators.
This threatened the yen carry trade, which had fueled risk-taking across global markets.
On-chain distribution and retail buying
The sharp correction forced bitcoin’s price below its short-term holder cost basis—a level that often marks the line between bull-market dips and deeper corrections.
Analysis from BRN indicated that accumulation by long-term holders and large wallets has slowed, while smaller retail investors have been buying at what are considered distressed levels. Misir summarized:
“The main takeaway is that supply has shifted closer to stronger hands, but supply-overhang remains above key resistance bands.”
