When Bank of Japan Governor Kazuo Ueda released hawkish signals of a "December rate hike," global carry traders closed their positions overnight. The on-chain transaction volume of Decentralized USD surged by 300% within 24 hours—global capital is fleeing traditional carry trades and pouring into the safe haven of decentralized finance. Bitcoin fell over 5% in 24 hours, with over 110,000 people liquidated. However, on-chain data shows that long-term holders are increasing their positions against the trend, with institutional funds net inflow exceeding 100,000 Bitcoins—this seemingly panic-driven sell-off is actually the prelude to a new bull market cycle.

In December 2025, the Bitcoin market will welcome a historic turning point. The probability of interest rate hikes by the Bank of Japan skyrocketed from 20% to 80%, forcing global carry traders to close their positions. Bitcoin plummeted from $90,000 to $86,000, with over $270 million liquidated in 24 hours. However, behind this seemingly panic-induced sell-off lies a deeper logic: Decentralized USD is reshaping the global liquidity landscape, while the institutionalization of Bitcoin is changing the underlying logic of traditional bull and bear cycles.


01 Japan's Interest Rate Hike: The unwinding of carry trades triggers a 'double kill' of long and short positions.

On December 1, 2025, Bank of Japan Governor Kazuo Ueda made a rare statement: 'We will discuss the pros and cons of an interest rate hike at the meeting on December 18-19.' This hawkish signal instantly ignited the market, with Japan's 2-year government bond yield soaring to a 17-year high, and yen carry traders began to unwind their positions on a large scale.


Chain Reaction of Carry Trade Reversal: As the world's largest carry trade currency, the low-interest yen has long encouraged international capital to borrow yen and invest in risk assets like Bitcoin. When expectations of a Japanese interest rate hike rise, carry traders are forced to sell Bitcoin and buy back yen for repayment, triggering a chain sell-off in the market. Bitcoin fell from 90,000 USD to 86,000 USD within 24 hours, with a daily decline of over 5%, and more than 180 million USD in long positions were liquidated in the past 24 hours.


The Cruel Reality of the Double Kill: The most brutal aspect of this sell-off is the 'double kill' pattern. The market first rapidly surged past previous highs, liquidating a large number of short positions (nearly 90%); then it quickly reversed downwards, taking out the long positions that had chased the rise (nearly 96%). This classic washout technique of 'baiting longs and killing shorts + reversing to kill longs' is a typical characteristic of the market entering a critical turning point.

02 Technical Analysis: The 90,000 USD level becomes a dividing line between bulls and bears.

The current Bitcoin price fluctuates around 90,000 USD, showing a delicate balance in the technical aspects. The 14-day Relative Strength Index (RSI) hovers near the neutral level of 50, while the Moving Average Convergence Divergence (MACD) remains in positive territory but tends to flatten, indicating that the market is at a critical point of 'diminishing explosive growth momentum.'


Key Support and Resistance Levels: Short-term resistance levels are concentrated between 93,000 USD and 94,000 USD. If this range is successfully breached, the price could likely challenge the psychological level of 100,000 USD. Key support levels are at 88,950 USD and 87,200 USD; falling below these levels could trigger a chain liquidation. The 200-day moving average is currently at 103,917 USD, which, although distant, remains a potential bearish reference point.


Counter-Trend Layout of Institutional Funds: Despite bearish market sentiment, Bitcoin ETFs continue to see stable net inflows, with institutional investors accelerating their Bitcoin holdings by adding 10,624 Bitcoins. At the same time, 10.7 billion USD of stablecoins flowed into exchanges like Binance, and these 'reserve ammunition' will form bottom-fishing power at key support levels.

03 Bull and Bear Cycle Transformation: From Mining Halving to Institutional Dominance

The bull and bear cycles of Bitcoin are undergoing fundamental changes. Traditionally, Bitcoin bull markets are driven by mining halving—where block rewards are halved every four years, reducing supply and pushing prices higher. However, in 2025, this logic is being rewritten.


Acceleration of Institutionalization: By the third quarter of 2025, Bitcoin will establish its core position in institutional portfolios. Companies like MicroStrategy currently hold over 640,808 Bitcoins, becoming the largest corporate shareholder globally. Sovereign wealth funds are steadily accumulating Bitcoin as a hedge against geopolitical instability and monetary expansion. This institutional trend has led to a decrease in Bitcoin's annualized volatility by as much as 75%, retreating from historical peaks.


Strategic Layout of Sovereign Wealth Funds: Sovereign wealth funds, managing trillions of dollars in global capital, have become major buyers during the Bitcoin price drop at the end of 2025. According to BlackRock CEO Larry Fink, sovereign wealth funds started buying heavily when Bitcoin prices fell to 80,000 USD, viewing it as a 'strategic reserve asset' alongside gold and government bonds. These purchases are not short-term trades but part of a broader institutional trend.

04 Decentralized USD: A New Anchor Point for Decentralized Finance

In this market transformation, Decentralized USD is becoming a key variable. Unlike traditional centralized stablecoins, decentralized stablecoins employ algorithmic mechanisms and over-collateralization designs to break free from reliance on a single issuer, becoming an important 'alternative currency' against regulatory crackdowns and payment censorship.


The Rise of Decentralized Stablecoins: Since 2024, influenced by rising regulatory risks of centralized stablecoins like USDT and USDC, decentralized currencies such as DAI, sUSD, LUSD, and RAI have begun to regain favor among developers and DeFi protocols. The new generation of projects no longer solely relies on pure over-collateralization or algorithmic stability models but instead integrates multiple asset combinations, risk hedging, and on-chain interest rate adjustment mechanisms.


Multi-Currency Anchoring Trend: Although USD stablecoins remain the market's mainstay, the global trend of de-dollarization is becoming increasingly evident, prompting the crypto market to develop local or commodity stablecoins pegged to the euro (EUR), Japanese yen (JPY), Chinese yuan (CNY), Hong Kong dollar (HKD), or even gold. This diversification trend is weakening the unilateral influence of the dollar hegemony over the crypto market.

05 Future Outlook: Structural Opportunities Amid Wide Fluctuations

Considering the technical, fundamental, and macroeconomic environments, Bitcoin will face a high-risk, high-reward landscape in December 2025. The market is expected to oscillate widely for an extended period, with a range between 78,000 and 118,000 USD.


Short-term Trend Forecast: After Japan's interest rate hike, Bitcoin is likely to first drop to the 86,000-87,000 USD range, killing off long positions and faking a bearish trend, before quickly bouncing back to 90,000 USD and continuing to rise explosively. The first target is 100,000 USD, and once breached, it could continue to rise and test 106,000 USD, until it reaches a point where the market dares not short or quickly spikes up, wiping out most shorts before rapidly retreating.


Long-term Trend Support: Despite short-term liquidity shocks, the long-term support logic for Bitcoin remains unchanged: institutional allocation ratios continue to rise, blockchain network computing power remains high, and long-term holders account for over 80%. These fundamental factors will regain dominance after short-term shocks.


Structural Inflows of Institutional Funds: Bitcoin ETFs have accumulated an asset management scale of 65 billion USD, with BlackRock's IBIT alone securing 18 billion USD in funding in the first quarter of 2025. Sovereign wealth funds have further driven this institutional adoption; they are steadily accumulating Bitcoin as a hedge against geopolitical instability and monetary expansion. This institutional trend is changing Bitcoin's volatility characteristics and price discovery mechanisms.


The market is undergoing a profound paradigm shift: as the Bank of Japan's interest rate hike triggers unwinding of carry trades, as institutional funds increase their positions against the trend, and as Decentralized USD reshapes financial infrastructure, the bull and bear cycles of Bitcoin are being redefined. From a cycle driven by mining halving to a structurally bull market led by institutions and sovereign wealth funds, the core driving force of this transformation is the systemic acceptance of digital assets by the global financial system.


For investors, the key is not to predict when the storm will end, but how to survive and position themselves during the storm. When the market panics, institutions are quietly building positions; when retail investors are cutting losses, long-term holders are increasing their positions against the trend. History does not repeat itself exactly, but it always rhymes—every deep correction is the starting point of a new cycle.

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