Bitcoin Price Correction: Analyzing the Dip Toward $85,000

Following a brief period of consolidation and a rise to approximately $93,000 last week, Bitcoin's price has retreated again to the $85,000 range, reflecting a significant 7% decline on Monday, as reported by CoinGecko.

Key Takeaways

Bitcoin's price has dropped to around $85,000, influenced by rising Japanese government bond yields.
An expert attributes this decline to the unwinding of the Yen Carry Trade, an extensive arbitrage trading strategy.
The recent market movements have shown a correlation between Bitcoin prices and major stock indices like the Nasdaq and S&P 500.
Whale investors have taken advantage of lower prices by accumulating Bitcoin, while miners reduced their sales significantly.
The upcoming Bank of Japan policy decision on December 18 may lead to further price fluctuations.

Bitcoin Price

Factors Behind Bitcoin's Recent Price Drop

Unraveling of the Yen Carry Trade

In a recent post on social media platform X (formerly known as Twitter), market expert Shanaka Anslem noted that the yield of Japan's 10-year bonds had climbed to 1.877% as of December 1, 2025, marking its highest point since June 2008. Meanwhile, the 2-year yield reached 1% for the first time since before the Lehman Brothers collapse.

He explained that these increasing yields have triggered a major unwinding of the Yen Carry Trade, which he considers the largest arbitrage trade in history, estimated at around $3.4 trillion, with total figures approaching $20 trillion. This strategy allowed global investors to borrow Japanese yen at low costs to invest in various assets, including stocks, U.S. Treasuries, and Bitcoin. However, this favorable environment appears to have ended last month.

Anslem described the mechanics of this situation as straightforward yet impactful. When bond yields rise, the yen strengthens, making leveraged positions less profitable. This creates a chain reaction: as selling triggers margin calls, it leads to further liquidations. On October 10, there was an astounding liquidation of $19 billion in crypto positions, marking the largest loss in a single day in crypto history. By November, Bitcoin exchange-traded funds (ETFs) experienced an outflow of $3.45 billion, with BlackRock’s IBIT suffering a $2.34 billion loss. An additional $646 million was liquidated on December 1 before lunchtime alone.

Prospects for Bitcoin's Price

This decline comes amid increasing correlations between Bitcoin and major stock indices—46% with the Nasdaq and 42% with the S&P 500. Anslem observed that Bitcoin, once seen as an “uncorrelated hedge,” is now acting as a leveraged indicator of global liquidity conditions.

Interestingly, despite the Bitcoin price drop, larger investors (whales) accumulated 375,000 BTC during this downturn. Additionally, miners have sharply decreased their sales, reducing monthly sales from 23,000 BTC to just 3,672.

Looking ahead, Anslem pointed out that a crucial moment is approaching on December 18 with the Bank of Japan's forthcoming policy decision. He indicated that if the bank decides to raise interest rates and anticipates further increases, Bitcoin could challenge the $75,000 level, signifying an additional 11% drop from current price levels.

Bitcoin Price Movement
The daily chart illustrates Bitcoin’s price drop toward $85,000 on Monday. Source: BTCUSDT on TradingView.com
Featured image from DALL-E, chart from TradingView.com