Bitcoin Dips to $85K: What's Next for BTC in December?
Bitcoin's price faces pressure as the possibility of a rate hike from the Bank of Japan leads to market corrections, potentially pushing BTC down to $67,000.
Bitcoin began the week on a downturn as concerns about a potential interest rate increase from the Bank of Japan (BOJ) led to an unwinding of yen carry trades, which might risk pushing the BTC price down to $67,000.
Key Takeaways:
- Bitcoin fell nearly 5% to around $85,000, resulting in the liquidation of $656 million in long positions.
- Increasing anticipation regarding a BOJ interest rate hike during their meeting on December 18-19 is influencing the BTC price.
- The bearish pattern suggests a possibility of dropping to $67,700.
BTC/USD hourly chart. Source: Cointelegraph/TradingView
The BTC price dropped to $85,616, marking a 5.5% decrease over 24 hours, as the market retreated broadly.
Bitcoin has declined 32% from the all-time high of $126,000 recorded on October 6, coinciding with extensive liquidations in the derivatives market.
Crypto liquidations (screenshot). Source: CoinGlass
Overall, $641 million was removed from the market due to the liquidations of long and short positions. Several analysts have linked this drop to rising expectations for the BOJ’s rate hike.
“$BTC dumped cause BOJ put Dec rate hike in play,” stated Arthur Hayes, adding that a USD/JPY rate of 155-160 makes BOJ hawkish.
BTC/JPY chart. Source: Arthur Hayes
The pressure on the yen is notable, with two-year yields reaching their highest level since 2008. As a consequence, there is a 76% likelihood of a BOJ rate hike on December 19.
A stronger yen due to higher rates could lead to an unwinding of carry trades, thereby affecting risk assets like cryptocurrencies.
Japanese two-year yields. Source: Nick
A Reuters survey showed that 53% of economists expect an increase due to inflation risks. Additionally, Polymarket reflects a 52% expectation of a 25 basis point rise.
Looking ahead, BTC price could potentially drop further and target liquidity under $86,000,
Veteran trader Peter Brandt remarked that Bitcoin might find support in the lower green zone, which lies between $45,000 and $70,000, as the macro downtrend continues.
As previously reported, Bitcoin closely mirrors the trajectory of the 2022 bear market with a correlation of nearly 100%.
This article does not constitute financial advice. Always conduct thorough research before investing.
