In the past 24 hours, Bitcoin plunged to $85,828, with a total liquidation of $174.2M across the network, of which long positions accounted for 93%! However, the real "killer" is not within the crypto circle, but comes from the other side of the Pacific, the Bank of Japan.

The Bank of Japan may raise interest rates by 25 basis points on December 19, increasing the policy rate from 0.5% to 0.75%, and the yield on 10-year Japanese government bonds has approached 2%. This seemingly small adjustment could trigger a global liquidity earthquake. Historical data show that the last time the Bank of Japan raised interest rates, BTC plummeted by 20-30% in the following weeks.

The underlying mechanism is astonishing: for years, global investors have borrowed low-interest yen to invest in high-yield assets like U.S. stocks and Bitcoin (yen carry trade). Once Japan raises interest rates, borrowing costs soar, forcing institutions to close out arbitrage positions, leading to a synchronized sell-off of global risk assets. The current market fear and greed index has dropped to 24 (extreme fear), with BTC's dominance at 58.5%, and market sentiment is extremely weak.

On-chain data confirms the panic: Spot BTC ETF saw a net outflow of $903M on December 15, with BlackRock IBIT experiencing an outflow of $356M. Exchange data shows a net inflow of BTC of +3,764 coins, indicating that retail investors are holding coins for sale.

The technical aspect is equally dangerous: BTC has broken below the key support level of $86,964 (1-hour EMA20), with the RSI oversold at 28.4 (1-hour) and 36.0 (daily), and the MACD has turned green across all timeframes. The liquidation map shows that the accumulated long positions in the range of $83,036-$85,646 reach as high as $1.23B, and a drop below this level would trigger a waterfall effect.

Investment insights: Closely monitor the Bank of Japan meeting on December 19 in the short term. If the rate hike aligns with expectations and the guidance is moderate, the market may see a technical rebound; however, if there are hints of continued rate hikes in 2026 and a reduction in ETF holdings, BTC may test the $80K support. It is advisable to control positions, set stop-loss orders, and wait for panic to clear before considering buying the dip.