Analysis of the Crypto Market Crash in December: The Impact of the Bank of Japan's Hawkish Policy
Key points
The cryptocurrency market did indeed experience a significant crash on December 1st, with Bitcoin falling below $88,000 and Ethereum dropping below $2,900. This was primarily driven by a global sell-off of risk assets triggered by hawkish comments from Bank of Japan Governor Kazuo Ueda. The total market capitalization fell below $3 trillion, and nearly $1 billion in long positions were liquidated.
Analysis of the impact of the Bank of Japan's policies
Key points of hawkish remarks
On December 1st, Bank of Japan Governor Kazuo Ueda stated in Nagoya that if the economy and prices develop as expected, the central bank will consider the pros and cons of raising interest rates at its policy meeting on December 18-19. This is the clearest indication of an interest rate hike in nearly two decades. (Bloomberg )
Bond yields surge
- The yield on 2-year Japanese government bonds rose to 1.01%, the highest level since 2008. (coindesk)
- 10-year yield : climbed to 1.850-1.870%, a 17-year high (ainvest)
- The yen strengthened : it appreciated 0.4% against the dollar to 155.48, as expectations of interest rate hikes drove safe-haven funds back into the country.
Major cryptocurrencies plummeted
Price performance comparison table (December 1, UTC)
| Cryptocurrency | Opening price | Lowest price | closing price | Decline | 24-hour trading volume |
|---|---|---|---|---|---|
| BTC | $91,218 | $85,694 | $85,955 | -6.4% | $58.7B |
| ETH | $3,049 | $2,828 | $2,828 | -7.3% | Significant growth |
| SOL | $139 | $126 | $126 | -9.3% | High volatility |
| BNB | $896 | $824 | $824 | -8.0% | Selling pressure |
Clearing data
- Total liquidation amount : $609 million, of which 89% were long positions [crypto.news]
- Bitcoin long liquidation : $150 million
- Ethereum long liquidation : $140 million
Technical Analysis Signals
Bitcoin Technical Indicators
- RSI indicator : The 14-day RSI has fallen below 50, indicating increasing bearish momentum, but it has not yet entered deeply oversold territory.
- MACD : A death cross formed in early October and continued into November; the monthly MACD turned bearish for the first time since January 2022.
- Moving averages : The price has fallen below the 200-day moving average (approximately $99,000-$100,000), and a death cross has formed between the 50-day and 200-day moving averages.
Key support and resistance levels
- Support levels : $90,000 (key psychological level), $81,000 (actual market average price)
- Resistance levels : $92,900 (convergence of technical resistance), $100,000 (concentration of bullish options trading).
- Risk warning : A break below the $90,000 support level could trigger a further decline to the $80,000 area.
Market sentiment and social media analysis
KOL opinion analysis
Ran Neuner attributes continued weakness to MSCI's October consultation excluding companies heavily invested in cryptocurrencies, predicting a likely continuation of the decline before the January 2026 ruling . (x.com )
Michael Saylor : Viewing volatility as normal, predicting Bitcoin will hit $180,000 before pulling back to $140,000. (x.com)
Fear and Greed Index
Market fear is dominating short-term reactions, with the Fear & Greed Index reaching extreme fear levels (the lowest since July 2022), but oversold indicators suggest a possible short-term rebound if the $90,000 support level can be held.
Macroeconomic Interconnectivity
Yen carry trade unwinding
A hawkish signal from the Bank of Japan threatening to unwind yen carry trades triggered a deleveraging sell-off in global stocks and cryptocurrencies. Asian stocks generally fell, with the Nikkei index dropping 1.3%. (beincrypto )
Deteriorating liquidity environment
Thin liquidity over the weekend amplified the decline, while institutional funds cautiously awaited US economic data and the Fed's policy direction, further exacerbating selling pressure.
Mainstream cryptocurrency outlook assessment
Short-term outlook (December-January)
- Bitcoin : Facing the risk of a pullback to $85,500-$82,000, but ETF and reserve demand supports the key $80,000 level.
- Ethereum : Technically, it shows faster momentum than Bitcoin. If Bitcoin stabilizes, it may outperform Bitcoin, but a break below $3,713 would test $3,495.
- Alternative coins : Generally following the decline of mainstream coins, smaller-cap tokens may perform better during the recovery phase.
Medium and long term outlook
Despite short-term pressure, structural demand (ETF inflows, corporate reserves, and institutional adoption) provides a floor for Bitcoin. Institutional analysts maintain their 2026 targets of $250,000 for Bitcoin and $60,000 for Ethereum, betting on the demand for a store of value in the context of a monetary system reset.
in conclusion
The Bank of Japan's hawkish shift did indeed trigger the recent cryptocurrency market crash, and the short-term outlook for major cryptocurrencies is indeed worrying. Technical indicators, derivatives data, and on-chain metrics all point to strengthening bearish signals, with the market facing liquidity tightening and deleveraging pressures. However, oversold levels and long-term structural demand suggest that if key support levels hold, the market may be poised for a rebound amidst the panic. Investors should closely monitor the results of the Bank of Japan's policy meeting on December 18-19 and subsequent actions by the Federal Reserve.