What are the core reasons for the recent decline in Bitcoin?

1⃣️ Macro risk aversion sentiment dominates: Although the Federal Reserve lowered interest rates last week, expectations for further cuts in 2026 have dropped to 40%-50%, raising concerns about tighter money; coupled with the decline in US AI stocks (for example, Broadcom's poor earnings report lowered the Nasdaq), Bitcoin, as a highly volatile asset, is among the first to be impacted. It currently has a strong correlation with the Nasdaq, and it is common for it to fluctuate alongside tech stocks.

2⃣️ Rising expectations for Bank of Japan interest rate hikes: The central bank is meeting this Sunday, and the market generally agrees with the expectation of a 25 basis point increase (bringing it to 0.75%, the highest in 30 years). Previously, any signal of tightening would lead to a significant inflow of funds back to Japan, causing Bitcoin to drop over 20% each time. This expectation has increased selling pressure in a market that already had limited funds after the weekend.

3⃣️ High leverage liquidation chain reaction: Recently, the market's leverage ratio has nearly caught up with the peak of the 2021 bull market, with many people going long. Yesterday's drop forced over 700 million dollars in long positions to be liquidated, creating a vicious cycle of further declines; miners and long-time players are also selling, increasing the selling pressure.

4⃣️ Other factors: Bitcoin ETFs have been consistently pulling money out, and institutions like MicroStrategy are under pressure to liquidate their holdings. Coupled with the tight funding at the end of the year, these factors are adding fuel to the fire.