Bitcoin has experienced a significant drop of 4% on Tuesday, with over $1.8 billion liquidated within 48 hours, influenced by tariff threats from US President Donald Trump and turmoil in the Japanese bond market.
In late trading on Tuesday, Bitcoin (BTC) was priced at $87,790 on Coinbase, reaching its lowest point since December 31. Reports from Coinglass indicate that approximately 93% of the liquidations were long positions.
BTC slumps 10% in a week, wiping out all January gains. Source: TradingView
This decline has led to the complete erasure of all the gains Bitcoin has made this year, which peaked just below $98,000. The overall cryptocurrency market has also seen a loss of $225 billion in capitalization, marking the steepest decline since mid-November.
Japanese Bond Market Trouble or ‘Sell America’ Movement
The renewed tariff threats have triggered the revival of what’s known as the ‘Sell America’ trade, a pattern last observed following an earlier tariff announcement in April, according to Reuters.
Dan Tapiero from 50T Funds stated that the drastic drop in Bitcoin’s price is due to an “annihilation in Japanese bond markets affecting all markets right now.” He anticipates that gold will see more gains, especially as it reached an all-time high per ounce shortly after this decline.
US Treasury Secretary Scott Bessent echoed these sentiments, explaining that the bond market’s movements are influencing the downward trend in the stock market.
Meanwhile, Japanese 10-year government bonds saw yields increase almost 19 basis points in two days, while 30-year yields marked their largest daily rise since 2003, attributed to expectations of increased government spending and liquidity reduction.
Jeff Ko, chief analyst at CoinEx Research, conveyed that this surge in Japanese bonds could further tighten liquidity on a global scale, and hinted at a potential ‘capital war’ amid rising geopolitical tensions.
“Fund flows are shifting away from US assets as geopolitical tensions mount… Bitcoin is in a tug-of-war, being sold off due to its sensitivity to liquidity conditions.”
