Bitcoin Falls To $84k: Is Japan’s Bond Market The Culprit, Or Is...

Bitcoin’s decline to $84,000 was driven by US dollar stablecoin concerns, a weakening global macroeconomic outlook and factors beyond Japan’s bond market stress.

Stablecoin concerns, regulatory pressure, and reduced risk appetite among traders weighed more on Bitcoin than Japan’s bond-market moves.

Reduced confidence in global growth and stress on digital asset reserve companies amplified BTC selling and subsequent stop losses.

Bitcoin (BTC) price dropped sharply on Sunday after failing to overcome $92,000. The slide to $84,000 on Monday wiped out $388 million in bullish leveraged positions, leaving analysts searching for a clear explanation. A mix of factors contributed to the sell-off and pushed traders toward a more cautious stance.

Some analysts quickly tied Bitcoin’s drop to turbulence in the Japanese bond market where yields on 20-year notes climbed to their highest level in 25 years.

Higher yields generally signal that investors are less willing to buy those bonds at current prices, whether due to concerns about inflation or rising government debt. Although the moves occurred on the same day, drawing a direct link is challenging, especially since the 30-day correlation has fluctuated between positive and negative throughout the year.

Japan’s market stress may also reflect deteriorating global economic expectations. Trader Jim Chanos, famous for predicting the fall of Enron during the dot-com bubble in 1999, highlighted in a recent interview with Yahoo Finance the growing risks tied to GPU-backed debt issued by cloud AI companies.

According to Chanos, “a lot of the AI companies [...] are just loss-making enterprises right now,” and if this does not change, “there is going to be debt defaults.” The financing trend that uses GPUs as collateral was pioneered by CoreWeave (CRWV US), according to Yahoo Finance, and has been accompanied by Nvidia’s (NVDA US) large investments in the cloud sector.

Related: Does GENIUS turn stablecoin issuers into stealth buyers of US debt?

Another source of unease came from the regulatory environment, even if not directly tied to Bitcoin. When traders sense that governments are tightening their stance on cryptocurrencies, many investors become less willing to increase exposure. So, even without direct consequences for Bitcoin itself, overall sentiment can turn negative.

Source: CoinTelegraph