Bitcoin experienced a sharp downturn in December, plummeting from its previous week’s highs to a level below $86,000. The decline was primarily driven by concerns emanating from Asia, particularly Japan and China, which saw heightened interest rates and economic slowdown fears. These developments triggered a wave of selling across global cryptocurrency markets. 1. The Bank of Japan’s hawkish statements by Governor Kazuo Ueda led to rising swap market probabilities for an interest rate hike in December. 2. China’s service sector PMI also entered contraction territory for the first time in three years, escalating anxieties about slowing economic growth. These factors contributed to a significant shift in investor sentiment and liquidity conditions. 3. Concerns stemming from comments by Strategy CEO Phong Le further exacerbated the decline. His statement hinting at selling Bitcoin reserves if the company’s shares fell below net asset value fueled a wave of panic selling, especially before Nasdaq’s annual index review and dividend payments. 4. While the US macroeconomic environment remains positive, Asian-based investors played a key role in triggering a market sell-off, pushing Bitcoin to its recent low. Despite supportive macroeconomic indicators such as the end of quantitative tightening, an interest rate cut in December seems likely (87% probability), and a potential appointment of crypto-friendly Kevin Hassett as Fed chair (66%). However, the current market sentiment remains volatile and unpredictable, raising questions about whether Bitcoin can sustain past price points before year-end. 5. The volatility highlights how Bitcoin and other cryptocurrencies remain acutely sensitive to changes in global liquidity conditions, with significant potential impacts on performance throughout 2025.