XWIN Japan
Bitcoin’s Decline and Why It Remains Suppressed: Driven by BOJ Rate-Hike Expectations and a Rapid Derivatives Unwind
The recent downturn in Bitcoin was not simply a technical correction. On December 1, speculation rapidly spread that BOJ Governor Ueda might signal the possibility of a December rate hike. This sudden shift in expectations sharply altered market sentiment. Later that day, his comments in Nagoya reinforced the interpretation that a policy shift was increasingly likely. As the yen strengthened rapidly, the long-standing JPY carry trade began to unwind at high speed. This created selling pressure across global risk assets, and Bitcoin — highly sensitive to liquidity changes — reacted first and most strongly. The same factor is also preventing upward momentum, keeping the price suppressed. In the derivatives market, distinct shifts emerged immediately after the speculation on December 1: Funding Rate turning sharply negative Before December 1, funding rates stayed in slightly positive territory. After the rate-hike speculation spread, funding flipped negative almost instantly. By December 2, the negative spread had widened further, clearly indicating a rapid shift toward short dominance and broad risk-off sentiment. Significant drop in Open Interest Open Interest also fell sharply following December 1. From the low-30B USD range before the speculation, it dropped to the 27B USD level within one to two days. This reflects forced liquidations of long positions combined with voluntary deleveraging — a classic pattern of strong unwinding pressure. These dynamics illustrate the sequence at the core of the decline: BOJ rate-hike expectations → yen appreciation → carry-trade unwind → rapid cleanup of BTC derivatives positions. Although short-term volatility is likely to continue, once the BOJ’s rate decision is officially confirmed and uncertainty is removed, the market is expected to gradually stabilize and shift into an environment where a rebound becomes more likely.