Bitcoin sinks below $89,000 as US equities and Japan bond turmoil rattle markets

Bitcoin BTC and other major cryptocurrencies slid late Tuesday as a broad risk-off move rippled through global markets, fueled by mounting macro uncertainty and a sell-off in equities and bonds.

Bitcoin fell 4.2% in the past 24 hours to trade at $88,746 as of 7:50 p.m. ET Tuesday, down from $92,500 earlier in the day, according to The Block's price page. Ethereum slipped 7.3% to $2,953.

The crypto plunge mirrored sharp losses in U.S. equities. The S&P 500 and the Nasdaq Composite both closed more than 2% lower. The Dow Jones Industrial Average closed down 1.76%. This marked the worst session since October for all three major U.S. benchmarks, according to CNBC.

Crypto-related stocks also came under pressure. Shares of crypto exchange Coinbase closed down 5.6%, while stablecoin issuer Circle slid 7.5%. Strategy, the largest corporate holder of bitcoin, fell 7.8%, while BitMine Immersion, the world's largest Ethereum treasury holder, plunged 9.4%. 

Analysts pointed to a combination of leverage unwinds and macro headwinds driving the sell-off. Vincent Liu, CIO of Kronos Research, said the decline was "driven by a risk-off macro backdrop and a leverage flush, triggering cascading liquidations."

With the sudden plunge, the crypto market saw roughly $1.07 billion in liquidations in the past 24 hours, including about $999 million in long positions, according to public data aggregated by Coinglass. Liquidations occur when a trader's positions in a particular market are forcibly closed due to significant losses or insufficient margin to meet the maintenance requirements.

Liu said that rising U.S.-EU trade tensions, weakness in Japan's bond market, and reduced pension exposure to U.S. Treasuries have weighed on global risk assets, including crypto.

Panic spills over

"'Sell America' trade was the name of the game last night, with equities, treasuries, dollar, BTC down, and gold up," said Peter Chung, head of research at Presto Research. "The epicenter was not in the U.S. but in Japan, where the [Japanese government bond] selloff started panic across the board, given the country's status as the top non-U.S. Treasuries holder."

Chung said the sell-off in Japanese government bonds triggered broader market panic — a phenomenon some traders dubbed "Japanic." 

Heavy bond selling pushed yields on long-term Japanese government debt to multi-decade highs, with 10-year yields jumping nearly 19 basis points over two days, their sharpest rise since 2022, while 30-year yields recorded their biggest daily increase since 2003, Reuters reported. Japanese Finance Minister Satsuki Katayama has urged market participants to remain calm.

How this situation evolves may hinge on Japan's snap election scheduled for Feb. 8. Chung said the outcome could either resemble a "Liz Truss moment" — referencing the former UK prime minister's 2022 bond market crisis — or lead to fiscal dominance that forces the Bank of Japan back into quantitative easing and yield-curve control. 

"Polymarket currently favors the latter with 91% odds," Chung said. "East or West, all roads lead to money printing."

Looking ahead, Andri Fauzan Adziima, research lead of Bitrue, said traders are closely watching bitcoin's key support level at $87,000 to $88,000, warning that a break could open the door to a further drop toward $85,000. 

Adziima added that investors are monitoring tariff headlines, macro and Fed signals, signs of cooling leverage in derivatives markets, and ETF and institutional flows for indications that the sell-off may stabilize.