Bitcoin Falls Below $90,000: “Sell America” and Japanese Government Bond Selloff
Geopolitics is currently in turmoil due to the Greenland conflict between the US and Europe – and the crypto market is feeling the impact very clearly. The sector has suffered a severe setback as Bitcoin dropped below the $90,000 mark, triggering a wave of forced liquidations. Over 183,000 traders lost their leveraged positions, with the total liquidation volume reaching approximately $1.09 billion according to CoinGlass data.
The price collapse occurred amid broad risk aversion across global financial markets, affecting both cryptocurrencies and traditional asset classes. Bitcoin was trading at $88,746 late Tuesday evening after the digital flagship currency had previously traded at $92,500. On Wednesday morning, it stands at $89,500.
Massive Leverage Meets Market Reversal
The liquidation data reveals the extent of speculative positioning before the crash: nearly 92 percent of forcibly closed positions were long bets, showing how heavily traders had wagered on further price gains. The largest single liquidation involved a BTCUSDT position worth $13.52 million on the Bitget exchange. A liquidation occurs when a trading platform forcibly closes a trader’s leveraged position because the trader can no longer meet the required margin. Such liquidation cascades often signal market extremes, where sentiment has become overextended in one direction and a price reversal could be imminent.
The crypto market selloff is reflected in sharp losses in US equities, with the S&P 500 and Nasdaq Composite both falling more than two percent – the worst trading session since October for all three major US indices (including the Dow Jones).
Crypto-related stocks also came under pressure: trading platform Coinbase lost 5.6 percent, stablecoin issuer Circle fell 7.5 percent, while Strategy, the largest institutional Bitcoin holder, lost 7.8 percent. BitMine Immersion, the company with the world’s largest Ethereum holdings, recorded a decline of 9.4 percent.
Japanese Bond Crisis Shakes Global Markets
According to analysts, the epicenter of market turbulence was not in the United States, but in Japan. A massive selloff in Japanese government bonds pushed yields on ten-year securities up by 19 basis points – the strongest increase since 2022 – while yields on 30-year bonds recorded their largest single-day jump since 2003.
Vincent Liu, Chief Investment Officer at Kronos Research, attributed the price decline to a risk-averse macroeconomic environment and leverage liquidations that triggered cascading forced liquidations. Additionally, renewed tariff threats from President Donald Trump toward European nations weighed on sentiment, while weakness in the Japanese bond market and reduced pension fund engagement in US government bonds pressured global risk assets. Chung observed a broad “Sell America” trade with falling stocks, government bonds, the dollar, and Bitcoin, while gold gained.
Traders are now closely watching the support zone between $87,000 and $88,000. A break below could open the way for a further decline toward $85,000. Further developments could be significantly influenced by Japan’s snap election on February 8, which could either lead to fiscal dominance and force the Bank of Japan back to quantitative easing – a scenario currently trading at 91 percent probability on the Polymarket forecasting platform. Investors are also watching tariff headlines, macroeconomic signals from the US Federal Reserve, and institutional capital flows into crypto ETFs as potential stabilizing factors.
