And why there might be more decline
Bitcoin dropped to $85,000 on December 15, continuing its recent decline amid global macro risks, deleveraging, and weak liquidity. This drop erased over $100 billion from the total market cap of cryptocurrencies in just a few days, raising questions about whether the selling has ended.
And while no single catalyst caused this move, five overlapping forces pushed Bitcoin down and may continue to pressure prices in the near term.
Concerns from the Bank of Japan about raising interest rates led to reduced risk globally.
The biggest macro driver came from Japan. Markets moved ahead of the widely expected interest rate hike by the Bank of Japan later this week, which will raise Japanese interest rates to levels not seen in decades.
Even a slight increase is important as Japan has long fueled global risk markets through yen carry trades.
For years, investors borrowed cheap yen to buy higher-risk assets like stocks and cryptocurrencies. With Japanese interest rates rising, that trade is unwinding. Investors are selling risk assets to repay yen obligations.
Bitcoin reacted sharply to previous Bank of Japan hikes. In the last three instances, Bitcoin's price dropped between 20% and 30% in the following weeks. Traders began pricing in that historical pattern before the decision was made, pushing Bitcoin down in advance.
U.S. economic data is reintroducing uncertainty into policies.
Meanwhile, traders reduced risk ahead of a large list of U.S. macro data, including inflation and labor market figures.
The Federal Reserve recently lowered interest rates, but officials indicated caution regarding the pace of future easing. This uncertainty is significant for Bitcoin, which has increasingly traded as a macro-sensitive liquidity asset rather than as an independent hedge.
With inflation remaining above target and weak job data expected, markets struggled to price in the Fed's next move. This hesitation diminished speculative demand and encouraged traders to stay away.
As a result, Bitcoin completely lost its momentum as it approached key technical levels.
Heavy leveraged liquidations accelerated from the downturn.
Once Bitcoin fell below $90,000, forced selling took over.
More than $200 million in terrifying long positions were liquidated within hours, according to derivatives data. Seasoned traders had piled into bullish bets after the Fed cut interest rates earlier this month.
When prices fell, liquidation engines automatically sold Bitcoin to cover losses. This selling pushed prices down further, leading to more liquidations in a feedback loop.
This mechanical effect explains why the movement is quick and rapid rather than gradual.
The timing of the sale made things worse.
Bitcoin collapsed during weak weekend trading, when liquidity is usually lower and order books are shallow. In these conditions, relatively small sell orders can move prices aggressively.
Large holders and derivatives desks reduced exposure to low liquidity, increasing volatility. This dynamic helped pull Bitcoin from the low range around $90,000 towards $85,000 in a short window.
Weekend crashes often appear dramatic even when the broader fundamentals remain unchanged.
Pressure on the market structure intensified due to large sales from Wintermute, one of the largest market makers in the cryptocurrency industry.
During the selling period, on-chain and market data showed that Wintermute sold a large amount of Bitcoin — valued at over $1.5 billion — across centralized exchanges. Reports indicated that the firm sold Bitcoin to rebalance risk and cover exposure after recent volatility and losses in the derivatives markets.
Since Wintermute provides liquidity across spot and derivatives venues, its selling had a significant impact.
Sales timing was also important. Wintermute activity occurred under low liquidity conditions, leading to exaggerated downward moves and hastening Bitcoin's decline towards $85,000.
What will happen next?
Whether Bitcoin falls further now depends on macro follow-through, not on cryptocurrency-specific news.
If the Bank of Japan confirms an interest rate hike and global yields rise, Bitcoin may remain under pressure as carry trades unwind further. A strong yen will heighten this tension.
However, if markets fully improve and U.S. data softens enough to revive rate cut expectations, Bitcoin could stabilize after the liquidation phase.
Currently, the December 15 sell-off reflects a macro-driven reset, not a structural failure of the cryptocurrency market — but volatility is unlikely to fade quickly.
