Cryptocurrency crashes amid Japanese bond crisis and tariff war concerns—BTC falls below $88,000

The cryptocurrency market experienced a major turning point on Tuesday. Bitcoin failed to break through $89,000, and amid turmoil in the Japanese government bond market and new tariff threats from U.S. President Donald Trump, traders collectively withdrew from risk assets. This crash is not just a short-term price correction but a significant moment that demonstrates how global macroeconomic concerns are impacting the digital asset market.

Bitcoin Plunge Causes Overall Cryptocurrency Market to Crash

During the trading session, the entire crypto market plummeted rapidly. Bitcoin fell to $88,403, reaching its lowest level since January 2 of this year. According to the latest data, BTC traded around $88,050, with a 24-hour decline of 1.18%.

This decline is not limited to Bitcoin alone. Ethereum dropped to around $2,950, recording a 1.75% decrease over 24 hours. Solana retreated to $123, and privacy coins were also heavily sold. Monero declined by 11.6%, Dash by 8.4%, and Zcash faced 6% selling pressure.

These price movements are evident from the CoinDesk 20 index, which fell by over 5%, indicating that the entire crypto market is facing unified selling pressure.

Corporate Assets Also Hit—Crypto-Related Company Stocks Move in Tandem

The crash in cryptocurrencies also affected stocks of digital asset-related companies. MicroStrategy (MSTR), a major Bitcoin holder, declined by 7.8%, and Ethereum-related companies also took a significant hit.

Crypto exchanges like Coinbase fell 5.5%, and stablecoin issuer Circle dropped 7.5%. Bitcoin miners like CleanSpark faced over 3% selling pressure. This indicates that institutional investors are pulling funds not only from cryptocurrencies themselves but also from their surrounding industries.

Interestingly, the parent company of CoinDesk, Grayscale, saw a slight increase, suggesting that demand for information services is rising amid market volatility.

Contradiction with Gold Market—Why Are Cryptos Being Sold?

A notable phenomenon in Tuesday’s market is the opposite movement of gold and Bitcoin. Gold rose over 3%, climbing to around $4,750 per ounce. Silver surged over 7%, surpassing $95.

This is not just a market cycle fluctuation. Mike Novogratz, founder of Galaxy Digital, pointed out, “Gold’s strength reflects concerns about macroeconomic conditions. Ongoing geopolitical tensions, U.S. fiscal uncertainty, and strong central bank support are reinforcing its role as a defensive hedge.”

Regarding why Bitcoin was sold, Novogratz explained, “Bitcoin has tighter liquidity and more restrained risk appetite, so it’s lagging behind.” While gold functions as a reliable store of value, cryptocurrencies are being re-evaluated as risk assets.

Accelerating Collapse in Derivative Markets—Traders Build Short Positions Expecting Decline

Behind the crypto crash is activity in the derivatives market. Open interest in Bitcoin futures increased from $28.5 billion to $29.3 billion during the sell-off. This suggests traders are not liquidating spot holdings but building short positions in anticipation of further declines.

On the same day, $486 million worth of long positions were liquidated, following $637 million on Monday. These two days represent the worst consecutive long liquidations of the year, indicating that leveraged traders suffered massive losses, further accelerating the crypto crash.

Japan Bond Crisis and U.S. Tariff War as Triggers

The fundamental background for the crypto crash lies in turmoil in the global financial markets. Arthur Hayes, co-founder of BitMEX, said that market attention is increasingly focused on the chaos unfolding in Japan’s bond market and its potential spillover into U.S. Treasuries.

President Trump, in a press conference ahead of his Davos visit, intensified threats of new tariffs on Europe. Market participants are increasingly concerned that this policy could trigger a new trade war. In fact, the S&P 500 and Nasdaq 100 both declined over 2%, marking the worst trading days since the tariff threats in October.

U.S. Debt Crisis Deepens—Investors Flee

Adding to concerns, a Danish pension fund announced the sale of U.S. Treasuries. Anders Schelde, Chief Investment Officer of AkademikerPension, stated, “The U.S. is essentially not of good credit, and in the long run, the U.S. government’s fiscal situation is unsustainable.”

George Saravelos of Deutsche Bank pointed out that Europe holds $8 trillion in U.S. bonds and equities. He warned that in an environment where geopolitical stability among Western allies is fundamentally shaken, the rebalancing of the dollar could accelerate further.

DeFi Market Shows Unexpected Strength—Maintaining Neutral Positions Using Stablecoins

Interestingly, the total value locked (TVL) in the DeFi market overall maintained an upward trend since October 2023, even amid Tuesday’s crash. This indicates that investor demand for protocol yields still exists.

CoinDesk DeFi analysts noted that the divergence between price and TVL suggests DeFi traders are maintaining neutral positions with stablecoin-based holdings. In other words, while digital asset markets are crashing, DeFi participants are adjusting their positions to avoid missing yield opportunities.

AI-Related Companies Remain Resilient—Structural Investment Trends Continue

Contrasting with cryptocurrencies, AI-related companies showed resilience. Microsoft and Meta’s Q4 earnings reports revealed no slowdown in AI-related spending. Microsoft emphasized AI as one of its largest business segments, and Meta announced plans to significantly increase capital expenditure in 2026.

This structural trend indicates that AI remains a recognized and solid investment area even amid macroeconomic turmoil.

Conclusion—The End of the Crypto Crash Is Not Yet in Sight

The crypto market’s crash on Tuesday was not just a short-term profit-taking move but rooted in fundamental concerns about the global financial system. Factors such as the Japanese bond crisis, U.S. fiscal instability, geopolitical tensions, and declining confidence in the dollar continue to drive investors away from risk assets.

Cryptocurrencies need to re-establish their position as “safe assets” like gold, and ongoing adjustments are expected. Market consensus suggests that Bitcoin must break through the $100,000 to $103,000 level to recover its upward trend.