Bitcoin Plunges Below $88K as $1.8 Billion Liquidated Amid Japanese Bond Market Turmoil

Sharp Decline Triggers Mass Liquidations

Bitcoin experienced a significant downturn on Tuesday, falling approximately 4% to reach $87,790 on Coinbase during late trading hours, marking its lowest price point since December 31 ^[1]. The cryptocurrency has now erased all gains accumulated during the current year and sits 10% below its year-to-date peak of just under $98,000 ^[1].

The selloff triggered substantial liquidations across cryptocurrency markets, with more than $1.8 billion in positions unwound over a 48-hour period. Approximately 93% of these liquidated positions were long trades, according to data from Coinglass ^[1]. The broader cryptocurrency market experienced a collective loss of $225 billion in market capitalization, representing the largest decline since mid-November, bringing total market cap down to $3.08 trillion ^[1].

Japanese Bond Market Identified as Primary Catalyst

While initial reports attributed the market volatility to renewed tariff threats from US President Donald Trump, industry analysts identified disruption in Japanese bond markets as the more significant factor driving the selloff.

Dan Tapiero, founder and CEO of 50T Funds, characterized the market movement as a "wipeout" caused by "complete annihilation in Japanese bond markets infecting all markets right now" ^[1]. US Treasury Secretary Scott Bessent echoed this assessment, stating that markets were declining because "the Japanese [10-year] bond market had a six-standard-deviation move over the past two days," adding that this had "nothing to do with Greenland" ^[1].

Japanese 10-year government bond yields surged nearly 19 basis points over two days, while 30-year yields recorded their largest single-day increase since 2003 as investors anticipated higher government spending and reduced liquidity ^[1].

Global Liquidity Concerns Mount

Jeff Ko, chief analyst at CoinEx Research, explained that the surge in Japanese bond yields stemmed from fiscal uncertainty and market volatility ahead of the country's snap election ^[1]. He warned that this development "threatens to accelerate the carry trade unwind, further tightening a critical source of global liquidity" ^[1].

Ko noted that "beyond the trade war, a capital war appears to be emerging," with fund flows shifting away from US assets amid mounting geopolitical tensions ^[1]. He described Bitcoin as caught in a tug-of-war, sharing characteristics with hard assets like gold while simultaneously being sold off due to its heightened sensitivity to liquidity conditions ^[1].

Strategy Continues Aggressive Accumulation

Despite the price decline, Michael Saylor's company Strategy maintained its aggressive Bitcoin acquisition strategy. The firm purchased 22,305 BTC for $2.13 billion last week at an average price of $95,284 per coin, according to a Securities and Exchange Commission filing ^[2]. This transaction brought Strategy's total holdings to 709,715 BTC, acquired for approximately $53.92 billion at an average cost of $75,979 per coin ^[2].

The company now controls roughly 3.37% of the total 21 million BTC supply and 3.55% of the 19.98 million currently in circulation ^[2]. This purchase represented Strategy's largest Bitcoin acquisition since February 2025, when it bought over 20,000 BTC for around $2 billion ^[2].

Technical Outlook Remains Uncertain

Bitcoin has fallen below the 50-day exponential moving average, which previously served as support during the recent rally ^[1]. The cryptocurrency is currently testing a major support zone near $85,000–$87,000, with the Relative Strength Index at 42.65, indicating the asset is neither oversold nor overbought ^[2]. Market participants are closely monitoring whether Bitcoin can defend this support level or face further downside toward $80,000 ^[2].