Key Highlights
- BOJ’s rate hike signal caused a sudden crypto sell-off, which made Bitcoin drop about $4,000.
- However, market structure has improved with lower leverage, neutral funding, and stronger spot trading.
- High-beta tokens fell sharply, but major cryptocurrencies showed more resilience.
The Bank of Japan (BOJ) recently signaled that it may raise interest rates on December 19, 2025, which caused a widespread shake-up in the crypto market on December 1, 2025.
In a report, Wintermute, an algorithmic trading firm, said that the announcement disrupted the short period of calm the market had during Thanksgiving. During that time, Bitcoin climbed steadily from the mid-$80,000s to the low-$90,000s, offering investors a small relief after months of price decline. The total market value was around $3 trillion.
“The BOJ shock quickly overwhelmed last week’s support zone before any real consolidation could form,” Wintermute noted.
Lower leverage and stronger spot trading
Japan’s interest rate is known to affect the market. This is when investors borrow money in yen to invest elsewhere. When Japanese Government Bond yields go up, assets financed through yen during this time lose their momentum, which causes investors to sell assets quickly. Cryptocurrencies were especially affected because they are sensitive to global funding and liquidity changes.
The sell-off happened during one of the quietest trading periods of the year, including Sunday and Thanksgiving, which intensified the impact.
According to CoinMarketCap, Bitcoin fell roughly $4,000 before European markets opened. At the same time, gold prices went up, which showed how investors still prefer traditional safe havens during macro stress.
Wintermute noted that Bitcoin can act like digital gold when the market is calm, but it is not yet a full safe haven during strong market shocks.
From a structural perspective, Wintermute reported improvements beneath the surface. Basis has dropped to cycle lows, with BTC’s 90-day annualized basis near 4–5% and ETH around 3–4%, which means that some long positions are still in the market.
Funding rates across major cryptocurrencies have reset to neutral or negative levels for the first time since October. Total perpetual open interest fell from $230 billion in early October to roughly $135 billion, clearing excess leverage and reducing the chance of mechanical liquidations. Spot trading has gained a larger share of volume, and depth has held up well despite the holiday period.
High-beta tokens suffer while majors show resilience
The market’s performance during this period showed broad weakness. High-beta sectors led declines: AI tokens dropped 14.4%, DePIN 13.6%, Gaming 12.7%, L2 solutions 12.5%, Small Caps 10.4%, Mid Caps 9.7%, and Layer 1 networks 7.0%. The GMCI-30 index fell 7.3%. Major cryptocurrencies remained closely tied to macro trends, while smaller tokens showed only brief, isolated gains.
Wintermute concluded that even though big economic news still controls prices, the market is in better shape.
Also Read: Trust Wallet Adds Native Predictions Feature
