Bitcoin Dumps Below $87K as Japan’s Yen Carry Trade Unwinds: BOJ Shock, Crypto Liquidations and the Viral “Japan Crashed Crypto” Tweet

As of Tuesday, December 2, 2025, crypto traders are still digesting one of the sharpest macro‑driven jolts of the year: a violent Asia‑session sell‑off tied to Japan’s bond market and the unwinding of the famous yen carry trade.

Bitcoin slid from around $90,000 into the mid‑$80,000s during early Monday trading in Asia, with different venues reporting intraday lows between roughly $85,000 and $83,000. Estimates suggest $140–$150 billion was wiped from total crypto market value in hours, with spot prices for BTC hovering near $86,000 and Ethereum around $2,800. ^[1]

Behind the move is a powerful macro cocktail: surging Japanese government bond (JGB) yields, growing expectations of a Bank of Japan (BOJ) rate hike, and a sudden squeeze on yen‑funded carry trades that has put high‑beta assets like Bitcoin at the front of the liquidation queue. At the same time, a viral social‑media post claiming “Japan just crashed crypto” has added confusion and fear — despite offering no hard evidence. ^[2]

Below is a deep dive into how Japan’s yield shock is hitting digital assets, what’s really going on with yen carry trades, and why analysts say traders should treat viral crash narratives with caution.

Asia Session Shock: Bitcoin, Ether and Altcoins Hit by Japan Yield Spike

Several outlets paint a remarkably consistent picture of the Monday sell‑off in Asia:

Bitcoin dropped about 5% in early Asia hours, trading near $86,000 after breaking below the psychologically important $90,000 level. ^[3]
Intraday lows on some venues fell into the low‑$80,000s, with one report citing a dip into the $83,000 range before a modest bounce. ^[4]
Market cap wipe‑out: Estimates range from roughly $140 billion in lost crypto market value to about $150 billion erased as Bitcoin fell below $87,000. ^[5]
Liquidations: Over $646 million in leveraged crypto positions were wiped out early on December 1, with nearly 90% of those positions long. Around $185 million in Bitcoin longs were liquidated — the heaviest BTC flush since October 2025. ^[6]
Altcoins: Ethereum slid 5–8% into the high‑$2,700s / low‑$2,800s, while majors like Solana and Dogecoin dropped around 7–8% on the day. ^[7]

News desks from CoinDesk to Binance and Cointelegraph all tie the move to Japan’s bond market, with Bitcoin slipping below roughly $87,500 just as Japanese yields spiked to levels not seen since 2008 and traders ramped up bets on a BOJ rate hike this month. ^[8]

In other words: this wasn’t an isolated “crypto problem.” It was a classic macro shock that spilled straight into digital assets.

What Is the Yen Carry Trade – and Why Is It Hitting Bitcoin Now?

To understand why Japanese yields can knock billions off crypto, you have to understand the yen carry trade.

For decades, Japan’s ultra‑low interest rates encouraged hedge funds, macro funds and other institutional players to borrow cheaply in yen and invest in higher‑yielding assets overseas — everything from U.S. Treasuries to equities and, increasingly, crypto. This often happens via derivatives, not straightforward loans.

A Blockworks analysis, highlighted in Decrypt’s News Explorer feed, underscores just how big this ecosystem is, drawing on Bank for International Settlements (BIS) data: ^[9]

Notional FX swaps and forwards with JPY on one side total about $14.2 trillion, much of it off‑balance‑sheet.
Visible on‑balance‑sheet yen loans to foreign non‑banks are only around $271 billion, showing how much funding is hidden in derivatives.
Roughly $1.7 trillion in yen liquidity is provided by non‑bank financial institutions, such as trustee accounts that can pull back quickly under stress.

When JGB yields rise sharply, that cheap yen funding suddenly isn’t cheap anymore:

Funding costs spike for anyone borrowing in yen.
Volatility increases in JGBs, making the “carry” (borrow low, lend high) far less attractive.
Risk managers start de‑grossing — unwinding leveraged positions funded in yen.
They sell the riskiest, most volatile assets first. In modern portfolios, that often means Bitcoin and other crypto are “first on the chopping block.” ^[10]

That’s exactly what appears to have happened at the start of December.

BOJ Jitters: Yields at 17‑Year Highs and a Possible December Hike

Multiple reports describe a coordinated market reaction to comments from BOJ Governor Kazuo Ueda and a sudden leap in Japanese yields:

Japan’s 2‑year JGB yield jumped to around 1.0–1.01%, the highest since 2008. ^[11]
10‑year JGB yields climbed toward roughly 1.9%, also around multi‑decade highs. ^[12]
Overnight index swaps are now pricing around an 80% probability of a BOJ rate hike in December, a stark contrast to Japan’s long‑standing zero‑rate regime. ^[13]

In a translated write‑up from The Asia Business Daily, Ueda is reported to have hinted at a rate hike this month, saying policymakers would weigh the pros and cons and stressing that real rates remain low even with a modest increase. ^[14]

That was enough to shake global markets:

Japanese stocks fell as the yen strengthened.
U.S. stock futures and major indices came under pressure.
Global bond yields climbed, with the U.S. 10‑year benchmark rising and analysts calling the BOJ’s shift a “structural change” that investors must adapt to. ^[15]

For crypto, the key takeaway is simple: when the central bank anchoring global cheap funding turns more hawkish, the riskiest trades — including leveraged Bitcoin exposure — get hit first.

Soft Crypto Carry: Ethena, USDe and the Deleveraging Behind the Headlines

The yen shock landed on a crypto market that was already nursing its own hangover from months of “soft carry.”

In its piece “Yen pressures meet soft crypto carry,” Blockworks explains that BTC’s Asia‑session drop overlapped with weaker yields on Ethena’s USDe‑based strategies, which rely on delta‑neutral positions and perpetual futures funding to generate yield. ^[16]

Key points from that analysis:

BTC funding rates across major derivatives venues have been muted to negative since a historic October liquidation event.
Ethena’s synthetic dollar system, USDe, saw its supply fall from around $14 billion to about $7 billion, despite handling stress events successfully.
With perp funding low, sUSDe yields slipped below U.S. Treasury yields, making classic delta‑neutral carry trades less enticing.
On DeFi platforms like Aave and Pendle, TVL linked to sUSDe collapsed after a major Pendle expiry, dropping from more than $5.4 billion to roughly $340 million. ^[17]

Put simply, crypto was already in a de‑risking, de‑leveraging mode when the BOJ scare hit. That made the market structurally more fragile — and more vulnerable to an external macro shock from Japan.

Blockworks also notes that as the yen becomes more expensive, carry trades must be unwound, forcing a combination of de‑risking in high‑beta assets and mechanical JPY buying, which can reinforce yen strength and asset weakness in a feedback loop. Crypto sits squarely in that crossfire. ^[18]

China FUD Returns: PBoC Reiterates Crypto Ban and Targets Stablecoins

As if BOJ jitters weren’t enough, the same Blockworks report highlights another negative catalyst from Asia: a fresh statement from the People’s Bank of China (PBoC). ^[19]

While the substance was largely a reiteration of existing policy, the PBoC:

Reaffirmed that all virtual‑currency trading remains illegal in mainland China.
Explicitly categorized stablecoins within anti‑money‑laundering and capital‑flight restrictions.

The statement may not be new in legal terms — “the hundredth time China has banned crypto,” as the article dryly notes — but the price reaction was real:

Hong Kong‑listed, crypto‑exposed equities like Yunfeng Financial reportedly fell more than 10%.
Other names such as Bright Smart and OSL Group saw mid‑single‑digit to high‑single‑digit losses. ^[20]

In a market already on edge from the yen carry unwind, this renewed China FUD reinforced the risk‑off tone, amplifying the sell‑off across digital assets.

The Viral “Japan Crashed Crypto” Tweet – and Why It’s Misleading

Against this macro backdrop, a viral post from the popular Altcoin Daily account on X (formerly Twitter) proclaimed that “Japan just crashed crypto” — with no additional context. ^[21]

Blockchain.News, in a Flash News alert dated December 1, 2025, takes a critical stance on that claim:

The post offers no concrete evidence — no specific policy announcement, no exchange shutdown, and no price chart — that would justify saying Japan “crashed” the market on its own.
The outlet explicitly urges traders to treat the headline as unverified and to wait for confirmation from official channels or reputable market data feeds before making any decisions. ^[22]

Its analysis section does acknowledge that Japanese monetary policy can significantly influence BTC and ETH prices — particularly via yen‑denominated trading and macro sentiment — but stresses that the tweet is more a reflection of social‑media narrative than a documented, single‑cause crash.

In other words:

Japan’s bond shock and BOJ policy expectations are clearly central to this sell‑off. But the idea that “Japan crashed crypto” in one discrete move is an oversimplification, and traders are being warned not to trade based solely on a viral one‑liner. ^[23]

XRP Bucks the Trend (For Now) as BTC, ETH, SOL and DOGE Slide

Even in a broad risk‑off move, markets rarely move in lockstep.

According to CoinEdition, while Bitcoin and Ethereum dropped around 5% each on the day and majors like Solana and Dogecoin lost roughly 7–8%, XRP briefly rallied about 7–8% to around $2.02, making it a standout gainer amid the carnage. ^[24]

That divergence ties into separate, XRP‑specific catalysts, but macro still matters:

FXEmpire notes that the same yen carry unwind and rising JGB yields that punished BTC and ETH also hit XRP volatility, with traders eyeing support around the $1.80–$1.82 zone. ^[25]
If macro conditions worsen or liquidations expand, even recent outperformers like XRP could face renewed pressure.

Elsewhere in the market:

ETH mirrored BTC’s move but with slightly higher beta, dropping into the high‑$2,700s and flashing elevated liquidations across derivatives. ^[26]
Solana (SOL) slid into the mid‑$120s.
Dogecoin (DOGE) dropped toward the mid‑$0.13 area, amplifying the risk‑off tone in meme coins. ^[27]

The message from these cross‑asset moves is clear: when funding tightens in Asia and yen carry trades unwind, beta is punished, and even fundamentally strong narratives can be drowned out by macro flows.

Wall Street Voices: From Jim Cramer to Robert Kiyosaki

The macro‑crypto crossover has not gone unnoticed by high‑profile commentators:

CNBC host Jim Cramer has reportedly tied the latest “vicious” risk‑off move in Bitcoin and crypto‑linked stocks to mounting stress in Japan’s funding markets and concerns around MicroStrategy’s large BTC exposure, according to a write‑up on TheStreet. ^[28]
Separately, KuCoin News relays comments from Robert Kiyosaki, author of Rich Dad, Poor Dad, who warns of potential market deflation as Japan’s carry trade unwinds. He frames the unwind as a trigger for a broader correction and reiterates his preference for Bitcoin, Ethereum, gold and silver as “value‑preserving assets” in a tightening liquidity environment. ^[29]

While these views are opinionated — and often controversial — they highlight how Japan’s once‑esoteric carry dynamics have become front‑page material for both traditional and crypto‑native investors.

What Traders and Investors Are Watching Next

With the dust still settling on the early‑December shock, several key questions will shape crypto’s next move:

1. How Aggressive Will the BOJ Be?

Markets are currently pricing a high probability of a BOJ rate hike in December, but the size and framing of that move matter. A modest, well‑telegraphed adjustment could allow risk assets to stabilise, whereas a sharper turn or more hawkish guidance might extend the carry unwind and keep pressure on BTC and ETH. ^[30]

2. Will Yen Carry Deleveraging Accelerate?

If JGB yields stay elevated or climb further, large macro funds may continue reducing yen‑funded exposures, which could mean:

More selling in high‑beta crypto names.
Ongoing de‑risking in DeFi carry trades, especially those reliant on perp funding (e.g., Ethena‑style strategies). ^[31]

Conversely, if yields stabilise and volatility falls, some of that capital could cautiously return.

3. Do Crypto Funding and Ethena Yields Recover?

Blockworks argues that for Ethena’s engine and similar strategies to really recover, perp funding needs to turn positive and stay there, and ETH volatility has to rise enough to support wider basis. Until then, a larger share of capital is likely to sit in plain stablecoins rather than leveraged delta‑neutral trades, muting upside but also reducing systemic risk. ^[32]

4. How Much Is China a Real vs. Narrative Risk?

The PBoC’s reiterated ban shows that regulatory headlines from China still move prices, even when the legal substance hasn’t changed much. Traders will be watching closely for:

Any enforcement actions targeting offshore venues or stablecoin rails.
Follow‑through in Hong Kong equity markets that might signal deeper risk aversion toward China‑linked crypto plays. ^[33]

5. Can Crypto Decouple from Macro Again?

Both traditional and crypto reporters highlight how deeply digital assets are now woven into global liquidity cycles. When central banks tighten, crypto increasingly trades like a high‑beta macro asset; when they ease, it behaves more like a growth story with its own fundamentals. ^[34]

Over the coming weeks, traders will be watching:

BOJ decisions and messaging.
U.S. Federal Reserve policy and the odds of a December rate cut.
Funding rates, open interest and liquidation metrics across major derivatives venues.
Sentiment on X and other social platforms — while remembering that viral posts are not a substitute for data.

Bottom Line: Japan Matters – But Narratives Matter Too

The early‑December sell‑off shows how a single country’s bond market can ripple through global crypto:

Surging JGB yields and BOJ hike expectations made yen carry trades more expensive and volatile.
Macro funds responded by cutting risk, with Bitcoin and other cryptos among the first to be sold.
Existing fragilities — soft perp funding, compressed DeFi carry and lingering China FUD — amplified the move.
Social‑media narratives like “Japan crashed crypto” added emotional fuel, even as analysts cautioned that such claims lack concrete evidence. ^[35]

For now, crypto markets remain highly sensitive to Japanese monetary policy, bond yields and liquidity dynamics. As the BOJ edges toward normalisation, traders will need to balance structural macro shifts against project‑level fundamentals — and stay skeptical of one‑line explanations that ignore the complex plumbing connecting Tokyo’s bond desk to Bitcoin’s order books.