Bitcoin fell to $85,000 on December 15, deepening a correction that was surprisingly rapid. The recent drop wiped out over $100 billion from the total crypto market capitalization in just a few days. While there wasn’t a single trigger, a combination of macroeconomic factors, deleveraging, and low liquidity pushed the price down.
The move reignited the debate about whether the downward pressure has subsided or if latent risks remain. To understand the context, it’s crucial to analyze the factors that converged in this decline.
Macroeconomic factors that explain why Bitcoin fell to $85,000
Bitcoin’s drop to $85,000 is largely due to global macroeconomic tensions. One of the main focuses was Japan, where markets anticipated a possible interest rate hike by the Bank of Japan.
Even a moderate adjustment has an impact, since for years the cheap yen sustained the so-called carry trade, driving investments in risky assets.
When expectations of higher interest rates rise, investors unwind positions in volatile assets to cover their yen-denominated liabilities. In previous instances, Bitcoin reacted with declines of between 20% and 30% following similar decisions. This precedent led many traders to preemptively reduce their exposure.
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At the same time, uncertainty in the United States also weighed on the market. Inflation and employment data, along with cautious messages from the Federal Reserve regarding future rate cuts, reduced risk appetite. Bitcoin, increasingly correlated with global liquidity, lost momentum just near key technical levels.
Beyond the macroeconomic context, the market structure amplified the movement. When Bitcoin fell below $90,000, massive sell-offs were triggered. Within hours, over $200 million in leveraged long positions were automatically closed , accelerating the decline toward $85,000.
This domino effect was more intense because it occurred over the weekend, a period of lower liquidity. With thinner order books, relatively small orders triggered sharp price movements. Volatility increased without requiring large volumes.
Another relevant factor was the activity of large participants. Market data showed significant Bitcoin sales by Wintermute, one of the leading market makers in the sector. These trades, intended to rebalance risk, coincided with a low-liquidity environment, amplifying the downward pressure in the spot market.