Bitcoin was trading around $86,000 as Asian markets opened Tuesday, with a sharp slide in cryptocurrencies and a global bond selloff keeping traders on the defensive. As a key barometer for risk appetite, the digital asset’s recent performance has signaled growing fragility in the market.

The world’s largest cryptocurrency slumped over 5% on Monday, briefly dipping below $85,000 before recovering slightly to $86,400. It remains approximately 30% below its October peak. The downturn triggered a cascade of liquidations, with Bitcoin traders seeing $251.69 million wiped out over the past 24 hours. Ethereum followed with $111.31 million in liquidations, while other major assets like SOL and ZEC experienced smaller losses of $19.22 million and $14.99 million, respectively.

Bond Market Tremors Rattle Investors

Broader equity markets in Asia attempted to stabilize, though caution prevailed. MSCI’s index of Asia Pacific shares outside Japan saw a modest 0.6% rise, and Tokyo’s Nikkei 225 edged 0.5% higher after a significant drop in the previous session. The underlying nervousness stems from a week-long selloff in Japanese government bonds, which accelerated after Bank of Japan (BOJ) Governor Kazuo Ueda hinted at an upcoming interest rate hike.

Traders increasingly anticipate that the BOJ will pivot from its ultra-loose monetary policy, a major shift that could send ripples through global funding markets. The yield on 10-year Japanese government bonds climbed another 1.5 basis points to 1.88%, a 17-year high. The pressure spilled over into international markets, pushing 10-year U.S. Treasury yields up to around 4.08%.

Eyes on the Fed as US Economic Data Softens

In the United States, economic indicators are reinforcing bets that the Federal Reserve is approaching a policy shift. Data from the Institute for Supply Management revealed that U.S. manufacturing contracted for the ninth consecutive month in November. The report showed weakening new orders, employment, and backlogs, painting a picture of a cooling economy.

This softer data has strengthened expectations for an interest rate cut. Interest rate futures now suggest an 86% probability of a 25 basis point cut during the Fed’s meeting on December 9-10. While Fed officials await one final inflation report, many analysts believe the labor market will be the deciding factor in determining the pace of rate cuts next year.

Crypto Stocks Tumble in Bitcoin’s Wake

The downturn in Bitcoin’s price had a direct impact on publicly traded companies with crypto exposure. Shares of MicroStrategy, the largest corporate holder of Bitcoin, fell sharply. Crypto exchanges Coinbase and Robinhood both saw their stocks drop, while mining firms like Marathon Digital and Riot Platforms slid between 7% and 9% as lower crypto prices squeezed their profit margins.

On-chain data provided further cause for concern. Analysts at Bitfinex reported that the recent price drop triggered a significant wave of realized losses, describing a market under stress as weaker holders capitulate. They noted that such heavy loss realization has often marked the later stages of corrective phases, potentially setting the stage for stabilization once selling pressure is exhausted.

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